On Monday (July 8), Bitcoin fell below $55,000 in the short term, hitting a low of $54,287. According to the latest data from Baidu's hot search list over the weekend, "When will Bitcoin fall?" ranked 10th on Baidu's hot search list. As the market cannot handle the influx of a large amount of Bitcoin from creditors of the former largest crypto exchange Mt. Gox, the price of the currency may fall to $40,000.
Papi, an on-chain analyst verified by CryptoQuant, said that Bitcoin could fall to $40,000 as the market believes that it cannot absorb the supply from Mt. Gox. Papi's bearish view on Bitcoin stems from two things, the average number of Bitcoins leaving cryptocurrency exchanges every day, and the total number of Bitcoins that Mt. Gox creditors may sell.
Bitcoin net flow (green), measured after subtracting outflows from inflows across all exchanges, shows an average of 150 bitcoins net flowing into exchanges each day. Meanwhile, the median amount of bitcoin flowing out of exchanges each day (blue) is about 22,360 bitcoins, indicating implied buying.
In contrast, the Mt. Gox trustee has distributed more than 47,000 bitcoins (yellow), for a total of 140,000 bitcoins. With an implied purchase of about 22,350 bitcoins, Papi believes that the market is not sufficient to absorb the potential flood of supply from Mt. Gox creditors, noting: "If German or Mt. Gox bitcoin holders make large deposits, the price could fall to around $40,000, and in the worst case even to more than $30,000."
This analysis is consistent with what Jacob King, a financial analyst at Whale Wire, said, noting that 99.2% of Mt. Gox’s bitcoins will be sold, adding: “Imagine billions of dollars worth of bitcoin being gradually sold off over the next few weeks. There is no way to describe this as positive, and there is no news that can offset this.”
However, the market could avoid a drop to $40,000 if macroeconomic signals persist and demand rises. For example, the latest U.S. jobs data could boost demand for riskier assets like Bitcoin.
This can be seen in the recovery of inflows into U.S. Bitcoin spot ETFs, which attracted $141.1 million worth of Bitcoin into their reserves on July 5, when the U.S. jobs data was released, indicating an improvement in risk sentiment.
U.S. nonfarm payrolls increased by 206,000 in June, exceeding expectations of 190,000, but the data for April and May were revised down to 108,000 and 218,000, respectively. The December 2024 federal funds rate futures contract suggests that the Fed will ease policy by 40 basis points by the end of the year.
However, the negative news has not stopped. After the continuous selling of 1,800 bitcoins last week, the on-chain analyst Ember monitored and marked that the German government address once again transferred 700 bitcoins to the 139...bVu address, equivalent to US$40.47 million.
It is reported that the address should be an asset management institution, which will transfer the coins to centralized exchanges such as Coinbase, Kraken, and Bitstamp after receiving them.
From a technical perspective, Bitcoin must reclaim its 200-day exponential moving average as support to improve its bullish outlook for the remainder of the third quarter of 2024.
As of July 7, Bitcoin is facing overhead resistance near the 200-day moving average, around $58,200, increasing the likelihood of a pullback to $54,000 in the coming days. However, a breakout event could push the price towards $61,000, in line with the 0.236 Fibonacci retracement level.
