Bitcoin rebounded 7.40% to $57,430 on July 6 after hitting a five-month low the day before. The recovery suggests that traders are beginning to overcome the bearish impact of Mt. Gox’s $8 billion BTC write-off and recent BTC sales by the U.S. and German governments.
Bitcoin Analyst Attempts to Calm Panic Sellers
Over the past 24 hours, top cryptocurrency analysts and influencers have been working to downplay the impact of Mt. Gox and the German and U.S. government sell-offs on Bitcoin’s long-term bullish outlook.
Among them is Ki Young Ju, founder and CEO of on-chain analytics platform CryptoQuant, who reminded traders that the government controls more than $8 billion worth of BTC, just 4% of the total $225 billion that has flowed into the Bitcoin market since 2023.
In other words, the Bitcoin market has enough liquidity to absorb the impact of a government-led BTC sell-off, especially amid concerns that the German government may dump its remaining Bitcoin holdings (around 42,000 BTC as of July 6) in the coming days.
Similarly, independent market analyst Trader Tardigrade compared the current Bitcoin market sell-off to past black swan events that led to sharp rallies and subsequent extended bull market cycles.
He noted:
“In 2016, 2020, and 2024, $BTC moved in the same pattern. Except in 2020, $BTC Fakeout also occurred below the trendline. After regaining above the trendline, a bull run ensued.
Analyst Rekt Capital believes that the current Bitcoin market sell-off is part of a typical cycle that occurs after a Bitcoin halving event. In this post-halving trend, Bitcoin's price usually falls sharply within a few months as the market adjusts to the new supply dynamics.
However, prices eventually recover as reduced supply begins to impact the market, and often enter a strong uptrend as reduced supply and increased demand drive prices higher.
Bitcoin traders catch up with stocks
Bitcoin’s sharp rally today was helped by a rebound in U.S. stocks to new all-time highs.
The S&P 500 hit its 34th all-time high of the year in thin post-holiday trading. Stocks rebounded after a turbulent period after data showed U.S. hiring slowed and the unemployment rate hit its highest level since 2021.
Wall Street is pricing in a 72% chance of a rate cut in September, compared with 55.4% a month ago, as the jobs data disappointed. Rate cuts are typically bullish for bitcoin and other riskier assets because they reduce the opportunity cost of holding low-yielding U.S. Treasuries.
For example, Bitcoin exchange-traded funds (ETFs) attracted $143.1 million when the U.S. jobs data was released on July 5. Earlier this week, these ETFs saw outflows for two consecutive days.
Bitcoin futures funding rates surge
Bitcoin’s price recovery was further accompanied by a strong rise in its futures market funding rate, despite a sharp drop in open interest (OI) during the same period.
As of July 6, the funding rate for Bitcoin futures was a net positive 0.178% per week, up from 0.044% per week two days earlier. Meanwhile, the OI, which reflects the total number of unsettled contracts, fell from $31.64 billion to about $28 billion during the same period.
In short, traders are confident that prices will rise and are willing to pay higher rates to maintain their long positions.
Bitcoin’s lower OI and higher funding rate further suggest that weaker hands are exiting their positions, while more confident traders or institutions are maintaining or increasing their exposure in anticipation of higher prices.
No investment advice! Zhuye is simple~
