Amidst the continuous decline of Bitcoin, CryptoQuant analysts pointed out that over 46,000 BTC were withdrawn from exchanges last Friday, setting a record for the highest number this year. In addition, Cointelegraph earlier reported that six key indicators suggest a bullish trend for Bitcoin despite the recent fall.
Bitcoin saw a significant drop last week, plummeting from a high of $63,861 to a low of $53,485. Although there was a rebound over the weekend, Bitcoin experienced another decline today, dropping from $57,000 to $54,260, currently trading at around $55,500.
As for whether Bitcoin will continue to decline or rebound, CryptoQuant analyst Woominkyu stated in a post that the largest Bitcoin withdrawal since 2024 occurred on July 5th, with over 46,000 BTC being withdrawn from exchanges. Investors typically view this phenomenon as a bullish signal, as it suggests that holders may want to hold BTC for a longer period rather than sell, thus moving the tokens to personal wallets for safekeeping.
On the other hand, Cointelegraph also reported earlier today on the X community platform that there are six key indicators suggesting that Bitcoin bulls still have the upper hand. The article states that there are two main reasons for the recent Bitcoin drop: the repayment of 140,000 BTC by Mt. Gox to its customers and the market sell-off panic caused by the liquidation of Bitcoin by the German government.
However, while the price was falling, 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 indicates a potential price reversal or a slowdown in the current downward trend.
Two other classic technical indicators support the reversal of the bullish trend. First, Bitcoin formed a bullish hammer pattern on July 5th, characterized by a longer lower shadow and a shorter upper shadow. Similar situations have occurred in May as well.
Second, the daily RSI value of Bitcoin is close to its oversold threshold of 30, which usually indicates a 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 increasing probability of a rate hike in September, the ability of Bitcoin to recover its bull market further improves in the coming weeks.
According to the latest employment data released by the US Labor Department on July 5th, the non-farm payrolls for April and May were revised downwards by a total of 111,000, indicating a continued slowdown in the hot US job market and adding confidence to the US efforts to curb inflation.
Furthermore, according to CME FedWatch data, the probability of a rate cut in September has reached 70.8%, significantly higher than the 57.9% predicted at the end of last month.
When the job market is weak, the Federal Reserve usually considers cutting interest rates to stimulate economic activity. Lower interest rates are usually positive for Bitcoin and other risk assets, as they make traditional safe investments like US Treasuries less attractive.
Another bullish indicator for 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 spot Bitcoin ETF attracted a net inflow of $143 million, indicating an increase in risk sentiment among Wall Street investors.
Bitcoin’s further bullish signals 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 has grown by about 0.82% year-on-year, decreasing from a peak of 4.74% in October 2023 to around 3.50%.
The Bitcoin miner capitulation indicator is close to the level seen when the market bottomed out after the FTX crash in 2022, suggesting that Bitcoin may have already bottomed out. Miner capitulation occurs when miners reduce operations or sell a portion of the Bitcoin they mined and held as reserves to sustain their livelihoods, earn profits, or hedge Bitcoin risks.
Market analysts noted multiple signs of capitulation in the past month, with the Bitcoin price dropping from $68,791 to $53,550. It is worth noting that Bitcoin’s hash rate has significantly declined, with a total computing power decrease of 7.7%, hitting a four-month low of 576 EH/s.
The decline in hash rate 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 could stabilize their operations and reduce the demand for selling Bitcoin.
In addition, Mechanism Capital predicts that 98% of altcoins have reached their peak in this cycle and Bitcoin may drop back to $40,000. They also mentioned that the repayment of Mt. Gox will continue until October, and analysts believe that the unrealized profit of Bitcoin is too high, suggesting that there may be new selling pressure.
Jack Dorsey, the CEO of Twitter, believes that Bitcoin is likely to replace the US dollar and could reach $1 million by 2030.