In the case of Bitcoin’s continued decline, CryptoQuant analysts pointed out that more than 46,000 BTC were withdrawn from exchanges last Friday, setting a record for the highest number this year. Additionally, Cointelegraph recently reported that six key indicators suggest that Bitcoin is still bullish despite the drop.
Last week, Bitcoin experienced a significant drop, falling from a high of $63,861 to a low of $53,485. Although there was a rebound over the weekend, Bitcoin faced another decline this morning, dropping from $57,000 to $54,260. It is currently trading at around $55,500.
Regarding whether Bitcoin will continue to decline or rebound, CryptoQuant analyst Woominkyu stated in a post that the largest Bitcoin withdrawal in 2024 occurred on July 5th, with over 46,000 BTC being withdrawn from exchanges. This phenomenon is usually viewed as a bullish signal because it suggests that holders may want to hold BTC for a longer period of time rather than selling it, so they move their tokens to personal wallets for safekeeping.
On the other hand, Cointelegraph also published an article on X today, stating that there are six key indicators suggesting that Bitcoin bulls still dominate the market. The article mentions that the main reasons for the recent Bitcoin drop were the repayment of 140,000 BTC by Mt. Gox to its customers and the market sell-off panic caused by Germany’s liquidation of Bitcoin.
However, as the price dropped, the divergence between the price drop and the rising Relative Strength Index (RSI) gradually increased, which usually indicates a weakening of selling pressure. In technical analysis, this situation often suggests a potential price reversal or a slowdown in the current downward trend.
Two other classic technical indicators support the possibility of a bullish reversal. First, on July 5th, Bitcoin formed a bullish hammer candlestick pattern, characterized by a long lower shadow and a short upper shadow. A similar situation occurred in May as well.
Second, Bitcoin’s daily RSI value is close to its oversold threshold of 30, which usually indicates consolidation or a period of recovery. Analyst Jacob Canfield predicts that this indicator may indicate a trend reversal, with Bitcoin expected to rise to around $70,000.
With the probability of a September interest rate hike increasing, Bitcoin’s ability to recover in the coming weeks is further enhanced. According to the latest employment data released by the US Labor Department on the 5th, the non-farm payroll employment for April and May was revised down by a total of 111,000, indicating a continued slowdown in the booming US job market and adding confidence to the US’s efforts to combat inflation.
In addition, according to CME FedWatch data, the probability of a rate cut in September reached 70.8%, much higher than the previous month’s prediction of 57.9%. When the job market weakens, the Federal Reserve usually considers cutting interest rates to stimulate economic activity. Lower rates are usually positive for Bitcoin and other risk assets as they make traditional safe investments like US Treasury bonds less attractive.
Another bullish indicator in the Bitcoin market is the recovery of net inflows into the US spot Bitcoin ETF after two consecutive days of outflows. On July 5th, when the US reported weak unemployment data, the Bitcoin spot ETF attracted a net inflow of $143 million, indicating an increase in risk sentiment among Wall Street investors.
Furthermore, more clues for Bitcoin’s upward movement come from the recent increase in the US M2 money supply. M2 includes cash, checking deposits, and easily convertible near money such as savings deposits, money market securities, and other time deposits. As of May 2024, the M2 money supply grew by approximately 0.82% compared to a peak in October 2023, which had dropped by 4.74% to around 3.50%.
The Bitcoin miner capitulation indicator is approaching the level seen when the market bottomed out after the FTX crash in 2022, indicating that Bitcoin may have already reached its bottom. Miner capitulation occurs when miners reduce operations or sell a portion of the mined Bitcoin and reserves to sustain their livelihood, generate income, or hedge Bitcoin risks.
Market analysts have pointed out that signs of capitulation have appeared multiple times in the past month, with the Bitcoin price dropping from $68,791 to $53,550. It is worth noting that Bitcoin’s hashrate has significantly declined, with a total computing power decrease of 7.7%, reaching a four-month low of 576 EH/s.
The decline in hashrate indicates that some miners are scaling back operations, reflecting the financial pressure on the mining community after the halving. As weaker miners exit the market or reduce operations, more competitive miners will gain larger profits, which may stabilize their operations and reduce the demand for selling Bitcoin.
In summary, despite the recent decline in Bitcoin, there are indications that it may rebound. The withdrawal of a large number of BTC from exchanges is seen as a bullish signal, and several key indicators, such as the divergence between price drop and RSI, the bullish hammer candlestick pattern, the oversold RSI value, the increased probability of a September interest rate cut, the recovery of net inflows into the US spot Bitcoin ETF, and the increase in the US M2 money supply, all suggest that Bitcoin still has the potential to rise.