Bitcoin continues to struggle to regain momentum after falling from the $62,800 level about a week ago, fueling speculation of a further decline imminent. However, Bitfinexa major Hong Kong-based cryptocurrency exchange, predicted in a recent analyst report that Bitcoin could be approaching a potential local bottom, suggesting its recent decline could be coming to an end.
Is Bitcoin’s Decline About to End?
Cryptocurrency exchange Bitfinex revealed its forecast for Bitcoin on Monday in its most recent report. Alpha-112 ReportThis prediction coincides with the heavy selling of BTC in recent times, which may have negatively impacted the crypto asset, leading to notable declines in the past few days.
According to the report, in a move that was both expected and cruel, Bitcoin suffered a downtrend below the 120-day range, hitting a low of $53,219 for the first time since February 26. While this move is consistent with Bitfinex’s prediction of a market correction and increased volatility, the platform points out that based on the developments between July 6 and 7, a potential local bottom could be on the horizon.
Additionally, Bitfinex attributes the drop to recent BTC sales by Germany’s law enforcement agency, the Bundeskrimanalamt (BKA), and others. Over the past few weeks, the German government has consistently executed massive salesmoving thousands of BTC from self-custody to exchanges.
According to Bitfinex, this action ultimately triggered fear and uncertainty among investors across all demographics, causing them to sell BTC in large quantities. As a result, BTC saw a decline from its Tuesday high to a low of $53,219 on Friday last week, representing a 16% drop from peak to trough.
Bitfinex also attributed part of the drop to a large transfer of BTC from Mount Gox in anticipation of much-anticipated repayments from its creditors. Over the weekend, including on July 5, Mt Gox reportedly moved over 47,000 BTC to another wallet, triggering further selling among investors and potentially leading to a price drop.
Impact of massive sell-off on BTC is minimal
Despite these massive sales by the German government, Mt Gox and individual investors, Bitfinex says the impact on Bitcoin is minimal and probably much less than it appears.
Bitfinex pointed out that only $9 billion Bitcoin Until now, governments have taken possession of Bitcoin and then sold it, notably in the United States and Germany. Compared to the capitalization achieved by Bitcoin since 2023, estimated at $224 billion, this figure represents only 4% of the value added to the market.
As a result, Bitfinex believes that while the sales of confiscated BTC are significant in terms of individual transactions, their overall impact on the market and the stability of BTC is not as significant as it might first appear.
Featured image from iStock, chart from Tradingview.com
