Bitcoin’s Local Bottom Could Be Near as On-Chain Indicators Show Diminishing Selling Pressure

  • Bitcoin’s recent performance has been marked by declines, hitting its lowest level since February 26 and stabilizing around the $57,000 range amid significant volatility.
  • Despite these fluctuations, Bitfinex analysts have observed on-chain indicators suggesting that the leading cryptocurrency may avoid further sharp declines.
  • A recent report from Bitfinex, based on market data from July 6 and 7, hints that a potential local bottom for Bitcoin could be near.

Bitcoin’s Volatility and Potential Stability: Analysts Weigh In

Bitcoin May Hit a Local Bottom Soon

One cause of Bitcoin’s recent correction involves substantial BTC sales by both the German law enforcement agency, Bundeskriminalamt (BKA), and creditors of the now-defunct crypto exchange Mt. Gox. The BKA has been moving large amounts of Bitcoin to various exchanges, institutional investors, and over-the-counter desks, contributing to the volatility. Additionally, Mt. Gox’s creditors began receiving repayments totaling $9 billion in assets, including Bitcoin and Bitcoin Cash, which have influenced market dynamics. These movements caused a wave of selling across all investor categories, leading to increased market fear, uncertainty, and doubt (FUD). However, analysts believe that these sales might have already been priced into the market, reducing their anticipated impact.

Diminishing Selling Pressure Signals Potential Stability

Several on-chain indicators suggest that the influence of these large-scale BTC sales is lessening. One key indicator is the Coinbase Premium Index, which measures the percentage difference between BTC prices on Coinbase Pro and other centralized exchanges. A lower premium typically indicates strong selling pressure on the spot markets from various stakeholders, including miners, funds, and even government entities. Although the Coinbase Premium was low in June due to heightened selling pressures, it has recently turned positive despite BTC prices remaining low, suggesting a reduction in selling pressure. Additionally, the Spent Output Profit Ratio (SOPR) for short-term holders has reached 0.97, indicating this group is now selling BTC at a loss, often preceding a price recovery. The average funding rate across all BTC perpetual trading pairs has also turned negative for the first time since May 1, supporting the idea that BTC is stabilizing or approaching a local bottom.

Additional Indicators and Market Sentiment

Further metrics indicate potential stabilization in the Bitcoin market. For instance, the SOPR’s value demonstrates that current market participants are engaging in loss-taking activities, which historically align with price rebounds. The negative funding rate across perpetual trading pairs hints at a bearish market sentiment likely transitioning to stabilization. These indicators collectively suggest that while the Bitcoin market has faced significant selling pressure and volatility, it might be on the brink of reaching a local bottom, setting the stage for a potential rebound.

Conclusion

In summary, despite facing strong selling pressures from large BTC sales by the Bundeskriminalamt and Mt. Gox creditors, Bitcoin seems to be nearing a local bottom. On-chain indicators like the Coinbase Premium Index, SOPR, and funding rates suggest that selling pressures are easing. As a result, the market may soon stabilize, offering a clearer outlook and potential recovery for investors watching the cryptosphere closely.

Don't forget to enable notifications for our Twitter account and Telegram channel to stay informed about the latest cryptocurrency news.

BREAKING NEWS

Ethereum Spot ETF Sees Remarkable $104.1 Million Net Inflow: Key Contributions Revealed

According to recent data from Farside Investors, *COINOTAG News*...

Massive $380 Million Inflow into Bitcoin Spot ETF Highlights ARKB, IBIT, and FBTC Gains

On April 26th, COINOTAG News reported significant activity in...

Gate.io Launches FIS Perpetual Contract Trading with Up to 50x Leverage

In a significant development for the cryptocurrency trading landscape,...

Trump Cryptocurrency Token Pins $900K in Transaction Fees Amid Controversial Dinner Contest

In a recent analysis by Chainalysis, it has been...
spot_imgspot_imgspot_img

Related Articles

spot_imgspot_imgspot_imgspot_img

Popular Categories

spot_imgspot_imgspot_img