Analysts View Bitcoin Likely to Remain Subdued until October
The cryptocurrency market is currently teetering as Bitcoin lingers around the $57,000 mark, displaying several bearish indicators that could signal more challenges ahead. With Bitcoin breaching its daily 200-day moving average and the Relative Strength Index (RSI) sharply declining, there is growing uncertainty about whether the digital asset can weather the impending storm. Compounding these concerns, the long-awaited Mt. Gox repayments are scheduled to commence in July, potentially injecting $8.5 billion worth of Bitcoin into an already volatile market. Will Bitcoin stabilize or plunge to new lows? Let’s delve into the data to find out.
Bitcoin is currently signaling bearish trends, having fallen below its daily 200-day moving average (MA). The daily RSI, at 29.79, has also dipped below its moving average, suggesting a downturn in momentum. Despite these indicators, historical patterns indicate that Bitcoin often rebounds strongly from such lows, making the current market conditions potentially opportune for investment. However, caution is warranted as the possibility of further decline looms large.
Historically, Bitcoin has crossed below its 200-day MA multiple times in recent years. Notably, in June 2022, it remained below until March 2023, hitting a low point in November before beginning an upward trajectory. A similar instance occurred in August 2023, lasting until October of the same year. These patterns hint that Bitcoin tends to trend below the 200-day MA during the summer and autumn months. While not definitive, this historical context provides strategic insights when combined with other analytical data points.
In July, Mt. Gox is set to distribute approximately $8.5 billion worth of Bitcoin to creditors. While some analyses, including CoinShares, suggest this may have a limited impact on Bitcoin’s price, the market may already be feeling its effects. In a bearish scenario, a potential drop of up to 19.2% is conceivable. Our internal analysis aligns with this projection, indicating that Bitcoin could potentially dip into a support range between $50,856 and $51,985. This range is significant as it aligns with multiple Fibonacci retracements and represents a macro “golden pocket,” indicating robust potential support. On a weekly timeframe, the 50-day moving average also converges in this zone.
Another critical consideration is the absence of substantial support levels until reaching this golden pocket, reinforcing the likelihood of Bitcoin descending to these price ranges. Additional data supports this perspective. For example, Glassnode’s Sell-Side Risk Ratio provides insights into potential market volatility by measuring realized profits and losses relative to asset size. Currently at historic lows, this ratio suggests a state of equilibrium but hints at potential volatility ahead.
Expectations for volatility remain elevated, with models assessing the 30-day change in realized volatility across various timeframes showing a notable decline, indicating potential future volatility spikes.
Furthermore, the URPD metric underscores supply concentrations around specific cost-basis clusters. Currently, the spot price hovers near the lower end of a significant supply node between $60,000 and the all-time high (ATH), where approximately 2.63 million BTC (13.4% of circulating supply) is held. This concentration suggests that many investors may react sensitively to price drops below $60,000.
Additionally, Bitcoin has fallen below the On-Chain Trader Realized Price, further supporting the prevailing bearish sentiment.
Despite significant interest from prominent figures in the financial sector, such as Michael Saylor, and strong demand at current price levels, recent data from CoinGlass indicates declining inflows into Bitcoin ETFs, with outflows beginning to emerge. This shift suggests growing bearish sentiment, even among institutional investors.
Considering these factors, it appears plausible that Bitcoin could remain at lower levels for an extended period, potentially until September or October.
Given this outlook, two strategic approaches emerge. Investors may consider dollar-cost averaging into Bitcoin at current prices, with a commitment to continue if prices decline further. Alternatively, waiting for a potential drop into the $50,000 – $52,000 range before initiating a long position could also prove strategic. Historically, investing in Bitcoin below its 200-day MA has often been a prudent long-term decision.
Disclosure: This article is for informational purposes only and does not constitute investment advice. All content is intended for educational purposes.
