Key Points
- Repayments in Bitcoin and Bitcoin Cash from the Mt. Gox exchange could put additional downward pressure on these assets.
- Metrics and futures data suggest more losses for Bitcoin in the coming week.
Bitcoin [BTC] prices have been under selling pressure, dropping from $71.9k on the 6th of June to $61.4k currently. This decrease is partly due to news from the Bitcoin exchange Mt. Gox.
In 2014, Mt. Gox experienced a significant hack, resulting in a loss of approximately 740,000 BTC, equivalent to $15 billion at current market prices. The exchange announced on the 24th of June that repayments would commence in July 2024, and these repayments will be made in Bitcoin and Bitcoin Cash [BCH].
Impact of the Repayments
In late May, the exchange moved 140,000 BTC, worth $9.4 billion. This move did not immediately impact prices, but a week later, BTC formed a local top just below the $72k mark. If a significant portion of that amount enters the markets, it could add to Bitcoin’s woes and heighten the selling pressure.
From the 8th to the 14th of May 2024, BTC bulls defended the $60k support zone and succeeded in driving prices higher to $71.9k on the 21st of May. Therefore, another retest of the $60.2k-$61.5k region is likely to see a positive reaction.
Metrics Indicating Possible End of Correction
Crypto analyst Axel Adler drew attention to the short-term holders’ (STH) spent output profit ratio (SOPR) metric. The 90-day moving average (90DMA) was just above 1 at press time. Compared to the 2016 cycle, it is possible that Bitcoin could continue its correction until this metric falls below 1.
Another analyst, Ali Martinez, noted that the daily RSI was once more in the oversold region, below the 30 value. The previous three times it happened saw a subsequent recovery in Bitcoin prices measuring 60%, 63%, and 198%.
However, this does not imply that the downtrend is at an end, nor does it guarantee an uptrend is around the corner. A violent move southward, potentially pushing below $60k in search of liquidity, before consolidation or recovery is anticipated in the coming weeks.
Data from Coinalyze showed that the spot CVD has steadily declined over the past month, indicating bearish sentiment over the past three weeks. Futures traders were unwilling to bet on a BTC recovery and spot traders continued to sell their assets.
In summary, it appears highly likely that Bitcoin bulls would continue to dance to the sellers’ tune over the next 2-4 weeks. A sudden drop in prices is also possible given the daily RSI’s dive into the oversold territory.
