As Bitcoin’s price drops to its lowest since late February, one on-chain analyst forecasts another 16% plunge to $47,000 as the next bottom for the top crypto.
When Will Bitcoin Bottom Out?
CryptoQuant author Adel Axel Jr. said recently that $47,000 is a 25% discount from the average purchase price of near-term Bitcoin holders. The figure is based on the average price at which all coins were moved in the last 30 days, as recorded on the blockchain.
Based on LookIntoBitcoin, the short-term holder noted the price at $64,614 on July 3. On that note, Axel wrote on X:
“This will be a good resistance point and a shakeout for new buyers. Previous organic corrections in the bull market lasted between 110 to 60 days.”
On-chain analysis shows that the price level mostly triggers capitulation among new market entrants, who often panic sell when their investments turn negative. Interestingly, Axel also highlighted the $46,300 price level, the average entrance price for the buyers in the last year.
CryptoQuant data shows that more than $2.3 billion worth of tokens moved on-chain on July 4 were last moved this year, while the older coins saw a less significant selloff. As of July 5, Bitcoin was valued at $56,374, a 20.73% drop over the past month.
Is It An Overdue Pullback?
Most analysts think Bitcoin’s recent pullback was long overdue. This week now marks the first time since late 2022 that Bitcoin has lost over 20% from its local highs, now down around 23.58% from its all-time high of $73,700 set in March.
In that context, Bitcoin recorded several pullbacks of at least 20% to 30% while constantly breaking new highs in 2017. In March 202, the crypto underwent a 60% correction amid COVID-19-related panic before it gained almost 20X in the following 13 months.
The current Bitcoin market is rattled by a new kind of panic: on July 5, the now defunct Mt. Gox exchange confirmed it had started repaying customers their long-lost Bitcoin, of which around 138,985 BTC ($7.52B) is still available.
Nonetheless, CryptoQuant’s Axel contends that real ‘panic’ is yet to set in, meaning that more volatility is coming in Q3 2024. He wrote:
“In the current situation, 47K doesn’t look as terrible as it did three weeks ago when we were at 70K. We need more shakeout but at a slower pace.”
Germany And Mt. Gox Bitcoin Sell-Offs Might Mark Market Bottom
A former Blockware Solutions analyst and top product marketing Manager at Unchained, Joe Burnett, predicts an ease in market conditions only when Bitcoin sell-off pressure from Mt. Gox and Germany subsides.
This comes as the crypto space is staring down its toughest headwind in months as the expectation of Bitcoin sell-offs from the German government and Mt. Gox starts to weigh extensively on the investors’ minds.
As of July 4, Germany had sent 3,000 BTC in portions to Kraken, Coinbase, and Bitstamp adding to a series of recent German BTC transfers.
Since Germany still holds 40,359 BTC in their reserve, now valued at $2.22 billion, tension is rising. In the meantime, the defunct exchange Mt. Gox moved $2.7 billion worth of Bitcoin preparing for the $9 billion payout process to repay the creditors.
It marks the exchange’s first massive transaction since May, after multiple smaller test transactions executed on July 3.
Bitcoin lost 7% of its value on Thursday, sending prices to their lowest point in four months to $53,550, and sparking a flurry of liquidations in the whole crypto market.
Bitcoin Sell-Off Presser To Ease
Amidst all this tension, observers speculated where Bitcoin prices might be going. Some forecast that market conditions might ease when selling pressure from Mt. Gox and Germany drops. Burnett insists that this will “mark a bottom.”
Burnett theorized that whales might lower their bids to avoid overpaying for Bitcoin, causing the price to plunge further. After the sale, the price might stabilize or surge again.
Chief Investment Officer at Ledn, John Glover, shared the view in his comments on the Mt. Gox situation in a CNBC interview. He discovered the sum to be quite insignificant:
“$9 billion of Bitcoin in a market that trades $30 to $40 billion a day in Bitcoin.”
Glover insisted that resolving the looming situation would increase general confidence, possibly making Bitcoin rally significantly after the “summer doldrums.”
The Market Requires A Catalyst To Recover
Considering the current negative market sentiment, any renewed positive price action might need a major catalyst.
One credible possibility is the approval of US spot Ethereum ETF in Q3 2024, which might trigger a bull run. This approval of spot Ether ETFs will ultimately attract institutional investors.
Most large financial institutions and asset managers have been doubtful about investing directly in crypto because of regulatory uncertainties and the challenges involved in owning digital assets. Nonetheless, a regulated ETF would offer a familiar and compliant platform for the entities to gain exposure to Ether.
Despite the promising prospect, some speculate that the effect of Ether ETFs will not match that of Bitcoin ETFs, which helped push Bitcoin to record new all-time highs.
The SEC already approved eight firms to launch Ethereum ETFs, but the approval process is still ongoing. Based on a statement by the SEC Chair Gensler, the launch is believed to be progressing ‘seamlessly.’ As needed by the SEC, these funds have begun filing their S-1 forms, another layer necessary for the approval process where the watchdog examines the particular details of every ETF.
Although the process might take several weeks, a recent Bloomberg report stated that it could be accelerated, enabling the ETFs to begin trading by mid-July.
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