Bitcoin Rebounds to $58K After Midweek Slump: Is the Worst Over?

Bitcoin Price

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After hovering around the $60,000 mark earlier in the week, Bitcoin broke through support on Wednesday evening as U.S. traders celebrated the July 4th holiday, beginning a sharp decline. By Thursday morning, BTC dipped to $56,750 before recovering slightly. Despite a final drop below $56,900 around mid-morning, Bitcoin’s price rebounded 5% throughout the afternoon. As of the latest update, BTC traded at $58,158.80, marking a 3.30% loss over the past 24 hours. 

This recovery alleviated fears of selling pressure from Germany’s government and the potential sale of Bitcoin from Mt. Gox.

Market Liquidations and ETF Activity

Market liquidations amounted to $100 million, a modest figure compared to the $600 million liquidated last week when Bitcoin fell near $54,000, its lowest point since February. Meanwhile, Bitcoin ETFs saw significant activity, with $438 million scooped up recently, bringing their total asset value to $49.3 billion. Trading volumes for U.S. Bitcoin ETFs on July 5 and July 8 were $2.18 billion and $1.98 billion, respectively, the highest since June 25.

German and Mt. Gox Sales: Is No Big Deal? 

Despite initial concerns about ongoing sell pressure from Germany and Mt. Gox, experts believe these fears are overblown. On Monday, the German government transferred $900 million worth of Bitcoin, and an additional $362 million transferred to Kraken and other trading desks on Tuesday. 

Ryan McMillin, chief investment officer at Merkle Tree Capital, stated that the worst of Germany’s selling appears to be over. According to Arkham Intelligence, Germany has transferred about two-thirds of its seized Bitcoin holdings, with $1.6 billion remaining.

While these government actions caused a massive sell-off thrice in June, CryptoQuant’s Ki Young Ju also argues that fears are overhyped. He points out that government-sold BTC represents a small fraction of total market inflows over the past year, minimizing their impact on prices. Despite recent declines and lingering market challenges, Bitcoin has shown resilience, trading at $57,360, aiming to recover from recent losses and regain bullish momentum above the $60,000 mark.

Future Prospects

While transferring funds to exchanges and market makers indicates a probable intention to liquidate, it does not confirm that Germany’s assets have already been sold. Plus, the bankruptcy estate of the defunct crypto exchange FTX is set to distribute approximately $16 billion in cash to crypto investors around September or October this year. McMillin noted that this cash distribution is expected to act as a “significant bullish catalyst” for the market in the coming months.