On Wednesday (August 14), Bitcoin rose in the short term and broke through $61,000. USD/JPY bulls once hit 146.06. Japanese Prime Minister Fumio Kishida announced that he would not seek re-election in September, and Japan will usher in a new leader. Mt.Gox, the former largest crypto exchange headquartered in Japan, flashed a signal and began the final stage of repaying creditors' funds. Bitcoin and the yen rarely get rid of arbitrage transactions and achieve a short-term rise.
Bitcoin shook off bearishness on Tuesday as investors reacted positively to the final lap of supply pressure at Mt. Gox. Meanwhile, Glassnode data showed that investors have resumed accumulation in hopes of seeing Bitcoin hit higher prices.
According to Arkham Intelligence, a wallet associated with the collapsed exchange Mt. Gox conducted a test transaction. The wallet allegedly held $2.19 billion worth of Bitcoin and is suspected to be the Bitgo exchange wallet, the final distributor of funds for Mt. Gox creditors.
Hours after the report was published, Bitgo finally moved $2 billion worth of Mt. Gox’s bitcoin in an effort to distribute the funds to creditors, which could be the final lap for Mt. Gox to repay the funds that entered the exchange.
The move sparked mixed reactions from market participants, and while some viewed it as a bearish move, others expressed bullish sentiments, speculating that Bitcoin could attempt to revisit the $70,000 region.
Bullish sentiment seems to have a slight upper hand, with Bitcoin up more than 3% in the past 24 hours. The move is in line with Glassnode’s recent weekly on-chain report, which shows that Bitcoin investors are gradually resuming accumulation behavior.
According to Glassnode data, the Accumulation Trend Score (ATS), which measures the change in the weighted balance of the entire market, recorded a high value of 1.0, indicating that accumulation has increased in the past few weeks.
The total supply of long-term holders (LTH) has also increased, with 374,000 Bitcoin entering LTH since May. “From this, we can infer that investors’ propensity to hold tokens is now a greater force relative to spending pressure,” Glassnode wrote.
Meanwhile, Bitcoin has found support near the active investor cost basis in the recent decline, suggesting that investors may still be expecting a rebound. The LTH seller risk ratio, a measure of the weight of profits and losses realized by investors, also remains below its previous all-time high. This suggests that LTH is less profitable in this cycle than in the past few cycles. Therefore, they may be expecting Bitcoin to hit new all-time highs again.
“This group of investors holds a higher percentage of Bitcoin network wealth than the previous cycle’s all-time high, suggesting that investors are showing a degree of patience, waiting for prices to rise,” Glassnode concluded. “Furthermore, despite the largest price contraction of the cycle, this group of investors has not panicked, highlighting the resilience of their overall conviction.”
This attitude may also have influenced the behavior of institutional investors towards Bitcoin, with Japanese investment firm Metaplanet recently announcing that it had acquired 57.1 Bitcoins worth $3.3 million, bringing its total holdings to 303 Bitcoins.
Marathon Digital also announced pricing for an oversubscribed senior convertible notes offering valued at $250 million, with the intent of using the money to purchase more Bitcoin.
After the Bank of Japan unexpectedly raised interest rates, a carry trade took place in the foreign exchange and cryptocurrency markets, with more funds flowing into long bets on the yen. But after the signal from the Mt.Gox exchange, Bitcoin and the yen rose together in a rare move.
Fumio Kishida will not run for a second term as president of the long-ruling Liberal Democratic Party in September, Bloomberg reported, paving the way for a successor to run as prime minister. "I will do my utmost to support the new leader chosen through the presidential election," Kishida said at a nationally televised news conference on Wednesday.
The winner of the LDP leadership contest, expected to be held in late September, will almost certainly become the next prime minister, given the party’s dominance in parliament. Kishida’s successor would be Japan’s third prime minister since Shinzo Abe, Japan’s longest-serving leader, stepped down in September 2020.
The yen strengthened on the news, while Japanese stock indexes were mixed, with the Nikkei down 0.2% and the Topix up 0.5%. Japanese government bond futures were little changed.
Kishida's approval ratings have been falling for months as voters have grown frustrated with his handling of a widespread party funding scandal, persistent inflation and a weak yen. Kishida, who took office nearly three years ago, says a series of political finance scandals have eroded trust and influenced his decisions.
Kishida’s government and the central bank have sought to present a united front and restore calm to financial markets after Japan’s stock market suffered its biggest plunge in more than three decades this month, sparking criticism of tight monetary policy and casting a shadow over efforts to encourage households to invest in assets.
Kishida's predecessor criticized him in a June 23 media interview and said it would be key for the LDP to bring a "sense of change" in the next leadership election. "The first and most obvious step to show that the LDP will change is for me to step down," Kishida said on Wednesday.
Although a general election is not needed until 2025, some surveys show the main opposition Constitutional Democratic Party is catching up with Kishida's Liberal Democratic Party in current voting intentions.
The next prime minister may still call an election to consolidate power for the new government, but the LDP and its coalition partner Komeito hold a strong position in national politics and are expected to easily retain control.
It is unclear who will succeed Kishida as prime minister, though former Defense Minister Shigeru Ishiba is the favorite in local media polls. Other names that frequently appear in polls include Digital Transformation Minister Kono Taro, Foreign Minister Yoko Kamikawa and Shinjiro Koizumi, the son of a former prime minister.
“The market is suggesting that Japan’s political situation will become unclear,” said Shoki Omori, chief strategist at Mizuho Securities. “Market participants will not like this uncertainty, especially those who invest in risky assets such as stocks.”
Bitcoin Technical Analysis
FXStreet analyst Manish Chhetri said Bitcoin has been facing resistance at the 61.8% Fibonacci retracement level of $62,066 from the July 29 swing high of $70,079 to the August 5 low of $49,101.
If the 61.8% Fibonacci retracement level of $62,066 continues to act as resistance, coupled with the broken trendline and the 100-day exponential moving average of around $62,649, selling pressure is likely to increase.
Failure to move above $62,066 could result in a drop of nearly 20% and could test the daily support at $49,917.
On the daily chart, the Relative Strength Index (RSI) and the Awesome Oscillator (AO) are below the neutral levels of 50 and 0, respectively, indicating an impending bearish trend.
However, if Bitcoin closes above the Aug. 2 high of $65,596, it will set a higher high on the daily chart that could result in a 6% increase in price and a test of weekly resistance at $69,648.
