Bitfinex Report Cryptocurrency Market Possibly Reaching a Potential Local Bottom but Caution Advised for the Federal Reserves Upcoming News Agenda

Bitfinex Alpha’s latest report stated that on July 3rd, due to concerns about the German government and Mt.Gox creditors selling off their Bitcoin holdings, the price of Bitcoin fell below the 120-day range to $53,219. However, weekend market data suggests that a potential local bottom may have been reached. The market has realized that although the Bitcoin transferred by the German government has a large nominal value, it accounts for a small percentage of the total trading volume. Volatility indicators show that the market expects greater stability in the future, with Bitcoin likely to hover at the current levels or experience smaller declines. Market positioning indicates complacency among short sellers, with more investors opting to short at a later stage, suggesting a lack of clear convictions on both sides. Long-term Bitcoin holders continue to realize significant profits, while short-term holders may have exhausted their selling. The funding rate for Bitcoin perpetual contracts has turned negative for the first time since May 1st, possibly indicating oversold conditions. Combined with the recovering SOPR (spent output profit ratio), this typically suggests that the market is finding a bottom. On the macroeconomic front, Federal Reserve officials remain cautious about interest rate cuts, despite supportive labor market data and easing inflation. Wage growth has slowed, job creation has been lower than expected, and the duration of unemployment has increased. Both the manufacturing and non-manufacturing purchasing managers’ indices have declined, reflecting weakened demand and sentiment, and employment in both sectors has also decreased. The institution does not expect the Federal Reserve to cut interest rates at the policy meeting on July 30th to 31st, but remains hopeful for a rate cut in September.