Bitcoin’s Potential Bottom: What Analysts Are Saying
Bitcoin has experienced a recent dip in its price, hitting its lowest point since February 26. Despite the high volatility and the cryptocurrency hovering around the $57,000 range, Bitfinex analysts have detected some promising signs on the blockchain that suggest the leading crypto asset might not face further decreases in value.
Insights from Bitfinex Alpha Report
- Market data from July 6 and 7 indicate a potential local bottom for BTC is approaching.
Bitcoin’s Correction Triggers
The recent correction in Bitcoin’s price can be attributed to various factors, including:
- Sizable BTC sales by the German law enforcement agency, the Bundeskrimanalamt (BKA).
- Defunct crypto exchange Mt Gox creditor redemptions.
Impacts of Sales and Redemptions
- BKA transferring large amounts of BTC to exchanges and institutional desks.
- Mt Gox initiating repayments of $9 billion in assets, including BTC and Bitcoin Cash.
- Increased market fear, uncertainty, and doubt (FUD) due to coin movements triggering BTC selling.
Diminishing Selling Pressure
Despite the initial selling pressure, recent developments suggest a positive outlook for Bitcoin:
- Coinbase Premium Index turning positive, indicating reduced selling pressure on the exchange’s spot markets.
- Spent Output Profit Ratio (SOPR) for short-term holders reaching a level of 0.97, indicating potential price rebound.
- Average funding rate across all BTC perpetual trading pairs becoming negative, hinting at stabilization or a local bottom.
Positive On-Chain Indicators
Other on-chain indicators supporting a potential recovery include:
- Increasing Coinbase Premium Index despite falling BTC price.
- SOPR for short-term holders signaling sell-off at a loss, a precursor to a price surge.
- Negative average funding rate on BTC perpetual trading pairs since May 1 bottom.
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