Cryptocurrencies

The price of Bitcoin (BTC) fell 5.8% between June 23 and 24, reaching its lowest level since…

The price of Bitcoin (BTC) fell 5.8% between June 23 and 24, hitting a seven-week low of $59,700. Despite a modest recovery to $60,400, a total of $153 million in long leveraged BTC futures contracts were aggressively liquidated due to insufficient margin. The move caused derivatives indicators to turn neutral, ending a five-week uptrend.

Concerns about the sale of Mt.Gox and the German government

Traders are now wondering whether deteriorating cryptocurrency market conditions indicate a longer bear market or a temporary panic due to miners being forced to cover their expenses amid declining profitability and the potential sale of large amounts of caches by miners. well-known entities. Should traders wait for a drop to $57,500 or increase their positions during this period of fear, uncertainty and doubt?

Some analysts have expressed concerns after bankrupt company Mt Gox announced an imminent payment in Bitcoin. Anonymous influencer Vijao pointed out that the announcement of the exchange could have been anticipated by insiders, which explains the recent price weakness. However, Vijao is perplexed about Bitcoin’s performance considering the constructive macroeconomic scenario.

source: fejau_inc

On May 28, 2024, Mt Gox transferred 141,686 bitcoins worth $8.6 billion, the first move since the stock market crashed in more than five years. The administrator confirmed that “a portion of the cryptocurrency rehabilitation applications” will be issued in July 2024. Although there is no certainty about the number of coins that will actually be distributed in the short term, investors fear that ‘a significant portion is sold, which would result in an exit from the crypto markets.

The recent transfer of nearly 6,500 bitcoins on June 19 from a wallet attributed to the German government by Arkham Intelligence has also sparked speculation about a possible sale. The wallet contains approximately 50,000 bitcoins, worth over $3 billion, and is believed to have been taken from an illegal movie website that was operating in 2013. Although no official confirmation has been provided, the Most recent transfers were made to well-known exchanges. .

Aside from the possibility of a U.S. interest rate cut by the end of the year, which would be beneficial for riskier assets like Bitcoin, traders are more focused on the uncertainty surrounding the US presidential election in November and inflation data. If the economy shows signs of an impending recession, investors will likely seek protection in their positions in cash and short-term U.S. Treasuries.

The US PCE inflation index is due on June 29, with economists expecting a 0.1% month-on-month rise in May. Traders became less comfortable with the stock market, especially after chipmaker Nvidia’s stock fell 5% on June 24. Concerns about demand for artificial intelligence amid intense competition from Intel, AMD and others have led investors to question the sector’s valuations.

Bitcoin derivatives indicate weaker conditions, but FUD is likely overestimated

In this scenario, characterized by a moderate degree of fear, uncertainty, and doubt (FUD), Bitcoin traders became increasingly risk-averse, especially after the Bitcoin price fell 16%. since June 7, when it last approached the $72,000 level. . The bitcoin futures premium, which measures the price difference between derivative contracts and the regular spot market, hit a six-week low on June 24, reflecting a lack of investor enthusiasm.

Annual premium for 2-month Bitcoin futures contracts. Source: Laevitas.ch

The data reveals that the Bitcoin futures premium fell to 8% on June 22, below the 10% threshold for bullish sentiment. The indicator had already peaked at 16.5% on June 7, but it is getting worse every week as the Bitcoin price fails to show its strength.

about: 4-week correction for Bitcoin? Mount Jukes and German government add selling pressure

Similarly, demand for Bitcoin put options has reached a four-week high compared to put options.

Deribit Bitcoin Options Sell Ratio. Source: Laevitas.ch

The demand for hedging using protective calls is the main reason why the put-to-call volume ratio for BTC options reached 0.75 on June 24. This level still favors calls at 35%, but represents a drop from the previous week’s average of 80%. Essentially, Bitcoin derivatives metrics suggest traders no longer have confidence in the bull market, but it’s possible investors are overreacting to the news, meaning $60,000 support could hold.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.

Leave a Reply

Your email address will not be published. Required fields are marked *