Bitcoin has gained ground in recent days after a flat weekend, but there are no clear new catalysts on the horizon.
Over the past month, Bitcoin has been teetering on the edge of closing June with monthly losses and holding onto key support at $60,000. However, bearish indicators suggest that July could see greater selling pressure.
Mt. Gox unlocks $9 billion in Bitcoin
One of the bearish events for the crypto market in June was the long-awaited repayment of Mt. Gox. Once the world’s largest Bitcoin exchange, Mt. Gox will repay 140,000 Bitcoins, worth about $9 billion, to creditors in early July 2024. 850,000 Bitcoins disappeared when the exchange collapsed in 2014. The repayment has raised concerns about selling pressure in the market as creditors may sell these Bitcoins to realize profits, especially considering that Bitcoin’s price has risen 16,000% since the hack.
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JPMorgan analyst Nikolaos Panigirtzoglou pointed out that the recent behavior of Gemini creditors supports this bearish thesis. They may have liquidated $2.18 billion in Bitcoin after Gemini’s announcement on May 29. Analyst Degen Kid expects that the price of Bitcoin may fall to $55,000 during the Mt. Gox repayment period in July.
On-chain indicators show increased profit-taking
A large number of Bitcoin investors may be locking in profits at current price levels, anticipating that the market may be about to top. Since May, the 30-day average of Bitcoin's adjusted spending output profit ratio (aSOPR) has increased from 1 to 1.03, indicating that more investors are taking profits and selling. This is consistent with past market top formations.
Another on-chain metric, Net Unrealized Profit and Loss (NUPL), also indicates that potential upside for Bitcoin buyers is running out. NUPL above 0 indicates that investors are taking profits, and the growing trend in values means that more investors are starting to take profits. This reading usually precedes a market correction. Bitcoin's 30-day average NUPL hovered around 0.54 on June 30, suggesting that a market correction may be imminent.
Bitcoin Price Prediction: Bull Pennant Crash
Bitcoin’s four-hour chart shows a possible breakdown of a bullish pennant pattern. This pattern forms when prices consolidate inside a triangle pattern after a strong decline. If the price decisively breaks below the lower trendline and drops to a level equal to the height of the previous uptrend, it could trigger a deeper decline. According to this technical rule, Bitcoin’s deepest price target in July is around $56,000, which is a most pessimistic scenario.
Conversely, this bearish outlook could be avoided if the price breaks above the 50-4 hour exponential moving average (50-4 hour EMA; red wave) at around $61,925. This bullish reversal scenario would place Bitcoin’s upside target in July around the 200-4 hour EMA (blue wave) at $64,770.
Summarize
As July approaches, the Bitcoin market faces important challenges. Potential selling pressure from Mt. Gox repayments and profit-taking signals from on-chain indicators may put Bitcoin prices under more pressure in the coming weeks. However, if key technical levels can be broken, Bitcoin may also rebound. Investors should remain vigilant and pay close attention to market dynamics.
