Bitcoin Braces for July Instability as Mt. Gox Repayments Loom and Investors Eye Profits
Summary:
The end of June might see Bitcoin recording a monthly loss while clinging to the $60,000 support level, pointing to bigger challenges in July due to heightened selling pressures. This comes primarily as a result of the Mt. Gox repayments, the largest Bitcoin exchange that's slated to repay around $9 billion to its creditors beginning July 2024, a move that has raised concerns about an increased market sell-off. Further, various on-chain indicators show increasing profit-taking and potential exhaustion among Bitcoin buyers. Conversely, a successful break above the 50-4H EMA could reverse this bearish outlook for Bitcoin.
June's end may see Bitcoin (BTC) closing with a potential monthly deficit as it precariously balances on the pivotal $60,000 support threshold. It's bad news for bullish investors, as signs indicate a possible upward battle with escalating sell-off pressures in the coming July.
A crucial bearish event for the crypto market in June involved the anticipated repayments from Mt. Gox. The exchange, once the largest for Bitcoin, is set to reimburse around $9 billion or 140,000 BTC to its creditors, with repayments starting no earlier than July 2024. This long-awaited settlement comes after a lingering decade since the platform faltered in 2014, resulting in the loss exceeding 850,000 BTC.
Market analysts worry over the impending distribution that may ramp up selling pressure, given a likely plummet in Bitcoin values due to creditors potentially cashing in on assets earned, especially in the light of Bitcoin's price spike of 16,000% since the infamous hack.
A case in point is the analysis offered by Nikolaos Panigirtzoglou and his team at JPMorgan, citing the likely Gemini creditors' liquidation of a portion of the $2.18 billion Bitcoin post Gemini's announcement on May 29 as supporting this bearish sentiment.
There is further speculation of Bitcoin's value declining to approximately $55,000 in the face of the forthcoming Mt. Gox settlement in July as per analyst Degen Kid, despite an overall positive market expectation.
With regard to on-chain indicators, many Bitcoin investors may fixate their profits at the existing price markers, presuming a possible climax in market activity. For example, the 30-day average of Bitcoin's Adjusted Spent Output Profit Ratio (aSOPR), which gauges Bitcoin transactions' overall profit and loss, has seen an escalation from 1 to 1.03 since May. Certainly, a score above 1 signifies sellers profiting increasingly and aligns with peak market structures previously.
Additionally, the on-chain metric, Net Unrealized Profit and Loss (NUPL) showcases possible exhaustion of gain by Bitcoin purchasers. NUPL, computed by deducing the realized cap from the market cap divided by the market cap that denotes total profit/loss in all available coins expressed as a ratio. A Bitcoin NUPL reading above 0 signifies market profit and an upward trend in value implies an increasing number of profitable investors. As usual, this forebodes market adjustments, suggesting the same scenario for Bitcoin since its 30-day average NUPL hovers around 0.54 as of June 30.
Ominously, the 4-hour Bitcoin chart manifests potential bull pennant disruption, a pattern that evolves as the price amalgamates inside a triangle framework after a robust downward movement. This pattern concludes as the price breaks decisively beyond the lower trendline, dropping to a level matching the previous uptrend height.
Utilizing this technical rule on Bitcoin's 4-hour chart predicts the cryptocurrency's lowest-priced target for July at approximately $56,000. This marks a worst-case scenario.
Contrarily, a bullish scenario could be achieved by pushing the price above the 50-4H exponential moving average (50-4H EMA) around $61,925. This reversal to bullish operation would establish BTC's higher price target for July at its 200-4H EMA, or around $64,770. This piece does not provide any advice or recommendations for investment. Each financial and trading move involves risk and readers must carry out their own studies prior to deciding.
Published At
6/30/2024 9:05:00 PM
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