In recent days, Bitcoin has experienced a significant drop in price, reaching its lowest level since February. However, analysts at Bitfinex believe that there are on-chain signs indicating that the leading cryptocurrency may be approaching a potential local bottom. Despite the recent market volatility, data from July 6 and 7 suggest that Bitcoin’s correction may be coming to an end.
The recent price correction in Bitcoin was influenced by various factors, including large BTC sales by the German law enforcement agency, the Bundeskrimanalamt (BKA), and the ongoing creditor redemptions by the defunct crypto exchange Mt. Gox. These significant coin movements have led to increased selling pressure across all investor cohorts, causing fear, uncertainty, and doubt (FUD) in the market.
While the large BTC sales by the BKA and Mt. Gox creditor redemptions have contributed to the recent market correction, analysts suggest that the actual impact may be less substantial than initially perceived. Market participants are anticipating a recovery once the supply overhang is addressed, but there are indications that the correction may be coming to an end sooner than expected.
Several on-chain indicators support the theory that Bitcoin may be stabilizing and approaching a potential local bottom. The Coinbase Premium Index, which measures the percentage difference between BTC price on Coinbase Pro and other centralized exchanges, has shown a positive trend despite the continuous fall in Bitcoin’s price. This indicates a decline in selling pressure on Coinbase, a significant exchange platform.
The Spent Output Profit Ratio (SOPR) for short-term holders has reached a value of 0.97, suggesting that this investor cohort is selling Bitcoin at a loss. This behavior typically precedes a price rebound, indicating that market sentiment may be shifting towards a more positive outlook. Additionally, the average funding rate across all BTC perpetual trading pairs has turned negative for the first time since the May 1 bottom, further supporting the idea of potential stabilization in the market.
While Bitcoin has faced significant challenges in recent days, there are indications that the worst may be over. On-chain data and market indicators suggest that a potential local bottom for Bitcoin may be near, signaling a possible recovery in the coming days. Investors and traders are advised to monitor these developments closely and make informed decisions based on the evolving market dynamics.
Leave a Reply