CoinDesk Report:
On Monday, July 8th, Bitcoin fell below $55,000 in the short term, reaching a low of $54,287. According to the latest data from Baidu’s hot search rankings over the weekend, “When will Bitcoin drop?” climbed to 10th place. The influx of a significant amount of Bitcoin from Mt. Gox creditors, the former largest cryptocurrency exchange, may drive prices down to $40,000.
Papi, an on-chain analyst verified by CryptoQuant, suggests that Bitcoin could drop to $40,000 due to market concerns about absorbing Mt. Gox’s supply. Papi’s bearish view on Bitcoin stems from two factors: the average daily outflow of Bitcoin from cryptocurrency exchanges and the total number of Bitcoin Mt. Gox creditors might sell.
Net Bitcoin flows (green) are measured by subtracting outflows from inflows across all exchanges, indicating an average daily net inflow of 150 Bitcoin into exchanges. Meanwhile, the median daily outflow from exchanges (blue) is approximately 22,360 Bitcoin, suggesting latent buying pressure.
In contrast, Mt. Gox trustees have distributed over 47,000 Bitcoin (yellow) out of a total of 140,000 Bitcoin. With a latent buying volume of approximately 22,350 Bitcoin, Papi believes the market may struggle to absorb the potential flood of supply from Mt. Gox creditors, stating, “If large deposits from Germany or Mt. Gox’s Bitcoin holders occur, prices could drop to around $40,000, or even exceed $30,000 in the worst-case scenario.”
This analysis aligns with statements from financial analyst Jacob King of Whale Wire, who notes that 99.2% of Mt. Gox’s Bitcoin will be sold, adding, “Imagine billions of dollars’ worth of Bitcoin gradually being dumped over the coming weeks. There’s no way to spin this as bullish, and no news to offset it.”
However, sustained macroeconomic signals and rising demand could prevent a drop to $40,000. For instance, the latest US employment data might stimulate demand for higher-risk assets like Bitcoin.
This is evident from the recovery in inflows into US Bitcoin spot ETFs; on July 5th, these ETFs attracted $141.1 million worth of Bitcoin into their reserves when US employment data was released, indicating improved risk sentiment.
US non-farm payrolls increased by 206,000 in June, surpassing expectations of 190,000, although April and May data were revised down to 108,000 and 218,000 respectively. Futures contracts for the federal funds rate imply a 40-basis-point policy easing by the Fed before year-end 2024.
Negative news continues, however, with on-chain analyst Yu Jin monitoring a further transfer of 700 Bitcoin, approximately $40.47 million, to a German government address following the sale of 1,800 Bitcoin last week.
Reportedly, this address belongs to an asset management institution that typically disperses funds to centralized exchanges like Coinbase, Kraken, and Bitstamp upon receipt.
Technically, Bitcoin must reclaim its 200-day moving average as support to improve its bullish prospects for the remainder of Q3 2024.
As of July 7th, Bitcoin faces resistance near the 200-day MA around $58,200, with increased potential in the coming days for a pullback to $54,000. However, a breakthrough event could push prices towards $61,000, aligning with the 0.236 Fibonacci retracement level.
