Author: Katherine Ross, Blockworks; Translated by: Baishui, Golden Finance
The German government is scrambling to raise funds by trying to sell some of its Bitcoin reserves.
While analysts had been warning about the potential impact of the Mt Gox repayment, the German government’s move came as a surprise to some.
However, the German government’s sell-off wasn’t enough to stop John Glover’s bullish stance. Ledn’s chief investment officer believes Bitcoin could break $80,000 or even higher by the end of the year, with other analysts predicting it will hit $100,000.
Still, this may not prevent Bitcoin from falling again. He reiterated that he is eyeing the $55,000 to $56,000 level, as we previously reported. If it falls further, keep an eye on $49,000.
"You know, there's a lot of bitcoin coming into the market. You know, 140,000 or whatever number is, it's going to be a lot. But as we discussed before, who knows how many of them are going to be sold?" Glover said. Even before Mt Gox, price action "could not break out and make new highs."
"We went to $73,000 and then tested $72,000. Anybody who was long on the rally from $35,000 to $73,000 in March ... I could see them starting to think about taking profits when three attempts to make new highs failed," he added. As long as they don't have diamond hands, of course.
Keep in mind, we are also in the middle of a hot summer. For traditional markets, this usually means lower trading volumes. Glover believes that the entry of so many institutional investors means this trend will spread to the cryptocurrency market as well.
"One thing I've found interesting in the last 24 hours of trading is that there hasn't been a big increase in volume. I would have thought that with volatility going back up from $57,000 to $54,000 again, there should have been a pretty big increase in volume. But we haven't seen that. That makes me a little nervous because you tend to see volume surges at bottoms and tops. But we haven't seen a volume surge even though we've gone down and made new lows recently. So that makes me a little nervous that maybe we haven't seen the bottom yet. But again, it's hard to say," said Glover.
However, his reading was somewhat muddied by the German government's selling. Still, he believes the move makes sense.
"I mean, they've allegedly sold a lot of Bitcoin in the last 24 to 48 hours. It's interesting to me that they did that. But you know, it's not surprising when you see every government is strapped for cash," he said.
Overall, he estimates that the government has recovered $25 billion worth of Bitcoin, which is just another thing to watch out for as the government will seek to monetize these assets.
Considering that the market trades about $30 billion to $40 billion a day in Bitcoin alone, such a sell-off can be absorbed, he added. So far, the German government has sold about $2 billion, according to David Canellis of Blockworks.
Looking at the chart over the past week, it’s clear that most of the selling occurred during the Asian/European sessions – which makes sense given Mt Gox and the German government – but buying interest emerges when US buyers start logging on.
"That's what we've seen in the last few sell-offs. European stocks sold off late, Asian stocks sold off early, and then the U.S. stocks started to buy back in. So I think there was excess inventory from Mt Gox in Asia and traditional financial players looking to buy on the dip. So that makes sense. It's just a little hard to say who's going to win this battle between the bears and the bulls," said Glover.
