Mt. Gox’s preparations for repayments adds to Bitcoin’s downward pressure

  • Exciting news about Bitcoin and Bitcoin Cash repayments could lead to further downward pressure on these cryptocurrencies!
  • Market metrics and futures data suggest more losses could be on the horizon in the coming week.

Bitcoin [BTC] faced challenges recently as selling pressure pushed prices down from $71.9k on June 6th to $61.4k currently. Just hours ago, Bitcoin hit the $60.5k mark following news about the Mt. Gox exchange.

Once a major exchange, Mt. Gox suffered a massive hack in 2014, resulting in the loss of around 740,000 BTC, valued at $15 billion today.

After years of delays, an announcement on June 24th revealed that repayments to clients would begin in July 2024, with assets being returned in Bitcoin and Bitcoin Cash [BCH].

Discovering the Impact of this News

In late May, reports showed Mt. Gox moving 140,000 BTC worth $9.4 billion. While this didn’t immediately affect prices, BTC hit a local high just below $72k a week later.

This wave of selling pressure over the past weeks may have anticipated future developments like this. If a significant portion of those assets enters the market, it could exacerbate Bitcoin’s challenges.

From May 8th to May 14th, BTC bulls defended the $60k support zone, pushing prices to $71.9k on May 21st.

Therefore, a retest of the $60.2k-$61.5k range could trigger a positive response.

Indicators Suggest the Correction May Be Ending Soon

Bitcoin STH SOPR

Source: Axel Adler on X

Cryptocurrency expert Axel Adler mentioned the short-term holders’ spent output profit ratio (SOPR) metric, with the 90-day moving average hovering just above 1. He compared this to the 2016 cycle, suggesting that Bitcoin might continue its correction until this metric drops below 1.

Adler noted that a trend reversal in favor of the bulls could become more probable after this, although it may take some time, leading to potential losses or consolidation in the BTC market in the upcoming weeks.

Another analyst, Ali Martinez, highlighted that the daily RSI was in the oversold zone, below 30. Historically, similar situations led to price recoveries of 60%, 63%, and 198%.

While this is encouraging, it doesn’t guarantee an end to the downtrend or signify an immediate uptrend.

We might see a sharp drop below $60k to seek liquidity before potential consolidation or recovery in the future.

Bitcoin Futures Market Signal Bearish Sentiment

Bitcoin OI Coinalyze Bitcoin OI Coinalyze

Source: Coinalyze

Data from Coinalyze indicated a steady decline in spot CVD over the past month, signaling selling pressure and Bitcoin’s vulnerability.

Open Interest initially rose in early June but soon decreased. This suggested bearish sentiment for the past three weeks, with futures traders hesitant to bet on a BTC recovery and spot traders continuing to sell.

Additionally, sudden surges in long liquidations have pushed prices down further, increasing pressure on bullish positions.

Recent data showed a spike in long liquidations, with almost $75 million in long positions liquidated within a 12-hour period on June 24th based on Coinalyze data.

Bitcoin Long/Short Accounts RatioBitcoin Long/Short Accounts Ratio

Source: Coinglass

The long/short accounts ratio currently stands at 2.46, indicating a higher number of accounts holding long positions compared to short positions. This suggests that retail traders are optimistic about a Bitcoin rebound while larger accounts remain cautious.

Overall, it seems likely that Bitcoin bulls will continue to face challenges in the next few weeks, potentially leading to further price drops given the oversold conditions indicated by the daily RSI.

Curious about your portfolio’s performance? Try the Bitcoin Profit Calculator!

Based on current trends, Bitcoin’s future movements could depend largely on market dynamics, with potential for sudden price swings in the near term.

For more insights on cryptocurrencies, continue reading on our site!

Next: XRP at a crossroads: A drop to $0.445 or rally to $0.5 next?

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