On Monday, the cryptocurrency market stabilized after several days of massive selling. During the morning session, the German government transferred over 10,000 bitcoins to cryptocurrency exchanges and market makers, causing the price of bitcoin to briefly drop below $55,000. However, data from Arkham Intelligence showed that the German government address received 2,898 bitcoins worth approximately $163 million from exchanges including Coinbase, Kraken, and Bitstamp, during the closing hours of the US stock market.
The Block’s Director of Research, Steven Zheng, speculated that the exchanges likely returned the bitcoins because they were unable to sell them within the target price range. He stated, “Considering that some bitcoins have been returned from Coinbase to the German government address, it can be assumed that they are unsold bitcoins and part of the sales agreements between cryptocurrency exchanges and the country.”
According to Bitpush data, BTC reached around $55,200 in the early afternoon on Monday and rebounded to $56,662.40 after the close of the US stock market, recording a 0.58% increase in the past 24 hours. Among the top 200 tokens by market capitalization, altcoins experienced mixed gains and losses. Aelf (ELF) led the way with a 21.5% increase, trading at $0.421, while Celestia (TIA) and Curve DAO Token (CRV) rose by 14.5% and 10.1% respectively.
The total market capitalization of cryptocurrencies currently stands at $2.07 trillion, with bitcoin holding a market share of 53.5%. In the US stock market, the S&P 500 index and the Nasdaq 500 index rose by 0.10% and 0.28% respectively, while the Dow Jones index fell by 0.08% by the closing bell.
The impact of the German government’s selling pressure may have been exaggerated. According to data from Arkham, the government has already completed nearly half of its sales since starting to sell off its BTC holdings last month. The current holdings have decreased from nearly 50,000 bitcoins to 27,461, with a current value of $1.5 billion.
Recent headlines have focused on events such as the German government’s sell-off and the Mt. Gox refunds, with many analysts attributing them as the main reasons for the recent bitcoin crash. However, analysts from Bitfinex attribute the decline to normal seasonal weakness. They stated, “It is noteworthy that the actual market value of bitcoins that have entered the market since 2023 is as high as $224 billion. In contrast, the amount of bitcoins confiscated and subsequently sold by governments, including the United States and Germany, is only about $9 billion. This accounts for only 4% of the total accumulated actual value of the market since the beginning of 2023.”
Institutional investors see it as a buying opportunity. Despite the market downturn, data from CoinShares shows that inflows into digital asset investment products reached $441 million last week. Bitcoin investment products accounted for the largest share (90%) of total inflows into crypto products ($398 million). In terms of regions, the majority of inflows came from the US, totaling $384 million, followed by significant buying from Hong Kong, Switzerland, and Canada, with inflows of $32 million, $24 million, and $12 million respectively. Germany saw outflows of $23 million.
Bitfinex analysts believe that BTC may have reached a potential local bottom. Data provided by Bitfinex shows that since hitting bottom on May 1st, the funding rate for BTC perpetual contracts has turned negative for the first time. Historically, periods of negative funding rates, coupled with low short-term SOPR values (a financial indicator used to measure the profit or loss realized by a specific group of investors’ wallets on a given day), often signal the bottom of price adjustments. The analysts stated, “This could be seen as an enhancement of bearish sentiment, but it also reinforces the view that with the evolution of balanced buying and selling pressure, BTC may be stabilizing or approaching a potential bottom. Negative indicators indicate significant selling pressure or sellers dominating the market, but it could also indicate oversold conditions in the market. When this oversold condition coincides with a rebound in SOPR, it usually indicates that the market is bottoming out.”
Secure Digital Markets analysts stated in their report, “The RSI indicator shows that bitcoin has been oversold for the first time since August, just before the uptrend. For bitcoin to gain further momentum, the price needs to break through $58,500, and breaking through $60,500 would mark a return to bullish territory.” Ed Hindi, the Chief Investment Officer of Tyr Capital, believes that the current pullback is temporary and insists that the price of BTC will reach six figures by the end of the year. In an interview with CNBC, Hindi stated, “Bitcoin is currently in a correction phase due to miners and governments selling off their bitcoin inventory, but we believe long-term investors and speculators will continue to buy on dips. We see no reason to change our target of $100,000 for bitcoin by the end of 2024.”
Author: BitpushNews Mary Liu