Why is it said that Bitcoin will not directly reverse in a 'V' shape in the short term?

Recently, after Bitcoin’s sharp decline, market sentiment has become optimistic again. So, is a reversal coming? The main reasons for this round of decline are the German government’s sell-off and Mt. Gox’s compensation. So, has the impact of Mt. Gox’s compensation become smaller? Has the selling pressure on the German government weakened? How will the Bitcoin market develop in the future?

Has the impact of Mt. Gox’s compensation become smaller? Will Bitcoin rebound or reverse in the short term? As Bitcoin continues to fall, it is normal for the market to crave some psychological massage and comfort. From the perspective of technical analysis, Bitcoin has deviated significantly from multiple moving averages (MA), and a certain rebound is due to market conditions, but it may not be a direct V-shaped reversal in the short term. Recently, many analysts' remarks may become invalid in the face of facts.

Has the impact of Mt. Gox’s compensation really become smaller? Crypto analysts at Bitbank, a cryptocurrency exchange that supports Mt.Gox’s compensation efforts, said: “It is expected that changes in Mt.Gox’s wallet balance will have less impact on the market. When Mt.Gox’s trustees officially announced that they have begun repayments At that time, Bitcoin was already fluctuating around US$54,000. After the news was announced, the price of Bitcoin rebounded and briefly rebounded to US$58,000 last weekend. "This article believes that it is not that the impact of Mt. Gox has become smaller, but the market. Mt. Gox’s compensation was anticipated in advance. When the actual compensation began, Bitcoin had already fallen sharply. Bitcoin holders who received the compensation at this time were not eager to sell. However, when Bitcoin begins to rebound to a certain extent, users who receive Mt. Gox compensation may begin to truly stress test Bitcoin.

So, when will the real selling pressure on Mt. Gox come? The liquidator has previously detailed that the timetable for payouts to become visible in creditor accounts may vary depending on the exchange: Kraken could take up to 90 days; Bitstamp could take 60 days; BitGo 20 days; SBI VC Trade and Bitbank Completion of compensation within 14 days. If this cycle is followed, most creditors will likely receive compensation in the next two months. However, BitTweet reports that two of the Japanese exchanges (Bitbank and SBI VC Trade) have received and appeared to distribute the allocated funds received, completing the distribution within only a few hours instead of what was initially agreed upon. Within a maximum of two weeks. In addition, Bitstamp said in a statement: "Per the agreement with the Mt. Gox trustee, Bitstamp has 60 days to distribute tokens, but we will work hard to ensure that these investors are compensated as soon as possible." This may mean, The real selling pressure from Mt. Gox's creditors should come in the next month.

Has the German government’s selling pressure weakened? Should we be optimistic at this moment

There is no doubt that in addition to the compensation of Mt. Gox recently, it is the German government that has brought real selling pressure. The German government seems to expect that Bitcoin will plummet. It has been selling its Bitcoin holdings frequently recently. It may want to clear out its Bitcoin holdings as much as possible before retail investors receive compensation from Mt. Gox, thereby escaping early. . However, the market currently seems to be too optimistic about the German government's selling pressure. Let's first take a look at some of the more interesting analyzes in the market.

Through compilation, this article believes that the bullish sentiment in the market mainly comes from the following key indicators: 1. The market correction is mainly due to concerns about Mt. Gox continuing to repay more than 140,000 BTC to its customers and the German government’s BTC liquidation. Selling, although prices continue to fall, selling pressure is waning. In technical analysis, this situation usually indicates that the current downward trend may be reversing or slowing down; 2. Two classic technical indicators support a bullish reversal scenario, with the hammer line bullish , oversold RSI, Bitcoin BTC formed a bullish hammer line pattern on July 5. In addition, the daily RSI reading hovered near the oversold threshold of 30, which usually indicates a consolidation or recovery period; 3. Wall Street is betting on an interest rate cut in September The probability has increased. According to CME data, as of July 7, Wall Street traders believed that the probability of the Federal Reserve cutting interest rates by 25 basis points was 72%. A month ago, this probability was 46.60%; 4. Bitcoin ETF investors returned after falling in July. After two consecutive days of fund outflows, the inflow of funds into the US spot Bitcoin ETF resumed; 5. The US money supply again Expansion; 6. The surrender of Bitcoin miners suggests that BTC prices have bottomed out.

First of all, is the German government’s sell-off over? On July 8, on-chain analyst Ember said that the German government has transferred 4,338.7 BTC ($246.59M) to exchanges and market makers today (June 8). This is since they started selling coins on June 19. The day when the most BTC was transferred out.

On the evening of July 9, according to Arkham monitoring, in the past 3 hours, the German government has transferred 6306.9 BTC (USD 362.12 million) to Kraken, Cumberland, 139Po (possibly an institutional deposit/OTC service) and the address bc1qu . Of these, 3206.9 BTC ($184.58 million) were transferred out in the past 20 minutes. Since yesterday, the German government received 5,366 BTC from exchanges including Kraken, Bitstamp, and Coinbase.

On the whole, the German government is selling like crazy, and the market’s short-term bullish sentiment was almost directly suppressed. Currently, the German government still holds 22,847 BTC ($1.32 billion). At this pace, the market is expected to be difficult to reverse directly in the short term. In addition, as mentioned above in this article, most of Mt. Gox’s compensation work may not be completed until late July, when Bitcoin may encounter continued selling pressure.

Crypto analyst Alex Krüger published an article on the X platform to analyze and calculate the extent of the decline that could be caused by Mt. Based on the current market liquidity and the magnitude of the market decline caused by several previous large transfers of Bitcoin, Krüger calculated based on pessimistic assumptions, that is, if the German government address sells the remaining Bitcoins at once, the 85,000 Bitcoins held by Mt. Gox will If the currency will be sold by 30%, then the selling by Mt. Gox and the German government may trigger a rapid decline in the price of Bitcoin by 10.5%, but overall the market can fully absorb the above-mentioned selling pressure.

Although we need to be cautious now, late July is still worth looking forward to

The author is wary of the current optimism, but is still relatively optimistic about the market in late July. Although shorts still have a dominant position in mid-July, the market is like this, and longs and shorts are switching quietly and unconsciously; and the forces driving the conversion of the crypto market include the rising expectations of the Federal Reserve to cut interest rates, the passage of the Ethereum ETF, and the U.S. General elections, and OP_CAT technology upgrades, etc.

The author previously wrote on June 28 in "How much will the Mt. Gox compensation cost BTC?" Can the encryption market still stage a comeback? ” and “The July script has been written, how will Bitcoin make a comeback” on July 3. The article repeatedly mentioned factors that may promote the development of the Bitcoin market. From the current perspective, as expectations of interest rate cuts by the Federal Reserve rise, U.S. stocks have performed well recently, but the crypto market has performed poorly. This is mainly due to the selling by Mt. Gox creditors and the German government, which is the main reason for the short-term impact on the market. However, the improvement of the macro environment is real, which for the crypto market will prompt institutional funds to sell high and low to attract attention to crypto assets such as Bitcoin. In addition, judging from the latest news, the Ethereum ETF is likely to be approved on July 15. Once the Ethereum ETF is approved, new funds will be injected into the crypto market, and a drama of institutional bargain hunting will probably be staged, which will also completely trigger the market A reversal begins. Even if the Ethereum ETF cannot be approved on July 15, this may not be a good thing. In a sense, it will be more conducive to the trend reversal of the crypto market if it is done at the end of July or early August.

In addition, on June 25, technology media Axios reported, citing two people familiar with the matter, that former U.S. President Trump was discussing speaking at the Bitcoin 2024 conference in Nashville at the end of July. The Bitcoin 2024 conference will be hosted by Bitcoin Magazine and is scheduled to take place from July 25 to 27. If Trump attends a Bitcoin conference in order to gain support from crypto enthusiasts, there is a high probability that this will directly trigger a surge in Bitcoin.

Summary

From the perspective of the German government and Mt. Gox creditors’ compensation selling pressure, this article believes that the current crypto market conditions still tend to rebound rather than reverse. But by late July, most of the compensation work for Mt. Gox’s creditors may be completed. Under the influence of many factors such as the rising expectations of the Federal Reserve's interest rate cut, the approval of the Ethereum ETF, the US election, and the OP_CAT technology upgrade, a new round of Bitcoin's rise may begin.

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