After the sharp decline of recent days, some are wondering if another drop in the price of Bitcoin is possible today as well. 

In reality, the decline of recent days was triggered by some news related to massive sales of BTC, which are unlikely to be followed by similar news in the short term. 

The sales could continue, but in the meantime, the price has rebounded. 

The “collapse” of recent days

Compared to a month ago, the price of Bitcoin in the last 30 days has dropped by 17%. 

Given that it is an asset whose volatility is often high, a -17% in 30 days cannot really be defined as a collapse. 

Moreover, previously it had risen, so much so that the current level of about $57,000 is in line with that of early May, but also with that of late February from which the rally started that brought it to all-time highs in mid-March. 

But the downward movement of the last few days has been clear. 

On the first of July, the price of Bitcoin was still around $63,000, and within just four days it dropped to below $54,000, with a -14% that made many tremble.

This -14% in four days can indeed be defined as a mini-crollo, but since the price of BTC later returned to $57,000, it should be downgraded to a temporary mini-crollo. 

The reasons for the mini-crash

At this moment, the interest in Bitcoin is at its lowest.

Taking as a reference the daily volume of searches for the word bitcoin on Google worldwide, it is discovered that in the last period it has fallen to the lowest since October.

Furthermore, the daily RSI index of the relative strength of its price on the exchanges last Thursday and Friday fell below 30, that is, in the over-sold zone. 

Therefore, on one hand, the buying pressure was (and has remained) low, while on the other hand, the selling pressure has increased. 

The selling pressure has increased for two reasons. 

The first is the actual sale of thousands of BTC by some holders, including the German government authorities. 

JUST IN: German Government sells 17,000 $BTC worth $951 million, its largest single-day #Bitcoin liquidation.

— Watcher.Guru (@WatcherGuru) July 8, 2024

In the financial markets, the terms “bull” and “bear” are often used to describe market trends. A “bull” market is characterized by rising prices, while a “bear” market is characterized by falling prices. Investors often try to predict whether the market will be “bull” or “bear” in order to make informed investment decisions.

The second is the cascading effect of the news regarding both the sales of Germany and the beginning of the distribution of the 142,000 BTC held by Mt. Gox to its creditors.

These two dynamics, closely linked to each other, have combined, thus generating a sharp increase in selling pressure. 

However, it was a temporary phenomenon, as demonstrated by the fact that the number of BTC on exchanges after increasing last week, has been declining again since the weekend.

Is a new Bitcoin price crash possible today?

In light of this, is a new bull collapse possible? 

In theory yes, since the selling pressure has decreased, but the buying pressure has not increased at all. 

For example, the daily RSI index yesterday rose only to 34, that is, just above the oversold zone. 

However, starting from yesterday, the consequences on the crypto markets resulting from the news related to the sales by Germany and the distribution of BTC from Mt.Gox seem to have completely run out.

This does not exclude at all that there may be new news that triggers further declines, but that last week’s decline has now been exhausted. 

The comment of the analysts on the mini-crash of the price of Bitcoin? Another one coming today?

Yesterday, the new issue of the Bitfinex Alpha report was published. 

According to the analysts at Bitfinex, it is important to note that the realized capitalization of BTC introduced to the market since 2023 amounts to 224 billion dollars, compared to the mere 9 billion dollars of Bitcoin that have been seized and subsequently sold by governments such as those of the USA and Germany. 

This is because, doing the calculations, the BTC sold by government authorities represent only 4% of the total realized value added to the Bitcoin market since the beginning of 2023. 

Furthermore, the actual number of BTC moved to exchanges amounts to only a few hundred million dollars, which would suggest that their impact on the market has been relatively minimal. 

The analysts at Bitfinex also state: 

“Historically, periods of negative funding rates combined with low short-term SOPR values (a financial metric that measures the profit or loss realized on a given day for portfolios that fall within a specific cohort of investors) have often marked the bottom of price corrections. Negative funding rates suggest that selling pressure is high or that sellers are dominating the market, but they can also indicate that the market is oversold. When this oversold condition aligns with a recovering SOPR, it often signals that the market is finding a bottom level.”

The bottom

Nevertheless, it is not certain that the bottom in this phase is precisely the approximately $53,500 touched on Friday. 

The hypotheses are fundamentally three. 

According to some, the price of Bitcoin could continue to move sideways for a while above $53,000, so essentially the bottom might have already been reached, or almost. 

According to others, however, there would be the possibility of falling even to $52,000, or lower, in the short term, that is, returning to the values that BTC had in mid-February before the rally began that led it to record new all-time highs just before mid-March. 

There are also those who believe that the bottom could be below $50,000, suggesting that the bull run might already be over. 

To tell the truth, historically the price of Bitcoin has always reached its highs at the end of the year, in bullish years, that is between October and December. Furthermore, the real great bull run has always been during the year following the halving, and since the last halving occurred in April, one could expect a continuation of the bullrun even in 2025. 

However, this does not mean that the bottom of this period has already been reached on Friday.