Is there going to be another crash for bitcoin (BTC), or is this a great opportunity?
Current market trends indicate that outside forces such as Mt. Gox repayments and possible government BTC sell-offs are placing a great deal of pressure on bitcoin and the crypto markets. Could a re-entry into the cryptocurrency market by China tip the scales, as investors prepare for the impact?
As supply pressures increase, Bitcoin sinks the broader cryptocurrency market
BTC fell 4.12% on Sunday, July 7. BTC finished the week down 10.89% to $55,910, reversing a gain of 2.76% from Saturday, July 6.
Fearing that a supply boom to reverse the consequences of the Bitcoin Halving event would be fueled by Mt. Gox’s BTC payments to creditors, investors abandoned the cryptocurrency in large numbers.
Effect of Bitcoin Due to Mt. Gox Repayments
Over 141,000 Bitcoin, or more than $8.5 billion, will be returned to creditors by Mt. Gox. Moreover, debtors are expected by the cryptocurrency market to sell their Bitcoin for large returns. February 2014 saw the fall of Mt. Gox, with Bitcoin completing the month below $5600, or almost 10% of its current value ten years later.
But the US and German governments also own sizable holdings of Bitcoin.
External Factors Affecting Bitcoin: Are Government BTC Holdings a Market Danger?
Recently, the German government offered BTC to exchanges for sale, sparking concerns about a larger sale. The US government’s seizure of BTC in the Silk Road case will expose BTC and the cryptocurrency market to significant BTC sales.
A dashboard that exhibited Bitcoin holdings, historical balance graphs, and the latest transactions for the biggest governments that own the cryptocurrency was recently provided by Arkham Intelligence. Far more than the roughly 141,000 Mt. that Gox is repaying to creditors, the US government apparently possessed 213,297 BTC.
Possible Market Changes: Is Beijing Considering Bitcoin as a Gold Substitute?
Author and Senior Editorial Team Member of FX Empire James Hyerczyk talked about China’s potential comeback into the cryptocurrency market in June.
According to reports, the People’s Bank of China (PBoC) stopped buying gold in May, which stoked rumors that it would start investing in bitcoin and other cryptocurrencies. James also emphasized how popular Bitcoin is becoming as a hedge against the declining value of the US dollar.
A re-entry into the cryptocurrency market by Beijing could counteract the supply difficulties affecting crypto price movements.
Supply-Demand Dynamics: Investor Sentiment and Supply Pressures
If China was the other party to the deal, would the US stop selling off Bitcoin?
In conclusion, worries about excess supply still affect the desire of buyers for Bitcoin. There is a chance that there will be another sell-off of Bitcoin due to significant government ownership of the cryptocurrency. Should China re-enter the cryptocurrency market, though, things might get back in balance.
Investors need to be on the lookout for supply-side issues. Make necessary adjustments to your trading methods by keeping an eye on expert advice and real-time data. To manage the cryptocurrency market, stay up to date with the most recent information and observations.
Technical Analysis
Analysis of Bitcoin
The fact that BTC stayed significantly below the 200-day and 50-day moving averages confirmed the negative price signals.
A move in Bitcoin over the 200-day EMA would give bulls a chance to challenge the $60,365 resistance mark. If there is a breach from the $60,365 resistance level, BTC may go for the 50-day EMA.
Supply-demand imbalances and market flow trends for US BTC-spot ETFs require careful analysis.
However, a breakdown below the $52,884 support level might indicate a decline below the $50,000 handle.
With a 14-day RSI reading of 27.72, BTC is in oversold territory. Buying pressure could increase near the July 5 low of $53,591.
Ethereum Analysis
ETH remained well below the 50-day and 200-day EMAs, continuing the positive price trend.
A break above the $3,033 resistance level and the 200-day EMA could signal a move towards the $3,244 resistance level.
The discussion surrounding US ETH-spot ETFs must also be considered.
In contrast, if ETH falls below the $2,664 support level, the bears may make a run at $2,500.
The 14-period Daily RSI reading of 25.80 indicates that ETH is in oversold territory. Buying pressure could increase at $2,800.
