Bitcoin continues to struggle with regaining its upward momentum after dropping from the $62,800 level about a week ago, fueling speculations of an imminent further decline. However, Bitfinex, a leading Hong Kong-based cryptocurrency exchange, in a recent analysis report has predicted that Bitcoin could be nearing a potential local bottom, suggesting that its recent decline might be coming to an end.
Is The Bitcoin Decline About To End?
The cryptocurrency exchange Bitfinex revealed its forecast for Bitcoin on Monday, in its most recent Alpha-112 report. This prediction coincides with the heavy BTC sell-offs lately, which might have impacted the crypto asset negatively, leading to notable declines in the past few days.
According to the report, in a move that was anticipated and cruel, BTC suffered a downtrend below the 120-day range, hitting a low of $53,219 for the first time since February 26. Although this move is consistent with Bitfinex’s prognosis for a market correction and a rise in volatility, the platform underscores that considering the development between July 6 and 7, a potential local bottom may be on the horizon.
Furthermore, Bitfinex attributes the decline to recent BTC sell-offs from the German law enforcement agency, the Bundeskrimanalamt (BKA), and others. Over the past few weeks, the German government has constantly executed massive sell-offs, transferring thousands of BTC from self-custody to exchanges.
This action, according to Bitfinex ultimately triggered fear and uncertainty among investors from all demographics, causing them to sell BTC in large quantities. Due to this, BTC saw a decrease from its Tuesday high to a low of $53,219 on Friday last week, representing a 16 percent peak-to-trough decline.
Bitfinex also attributed part of the fall to a large BTC transfer from Mt Gox in preparation for its much-anticipated creditor repayments. During the weekend, particularly on July 5, Mt Gox was reported to have moved more than 47,000 BTC to a different wallet, triggering more sell-offs among investors and potentially leading to a decline in price.
The Sell-Offs Impact On BTC Is Minimal
Despite these huge sell-offs from the German government, Mt Gox, and individual investors, Bitfinex claims that the impact on Bitcoin is minimal and probably much lesser than it seems.
Bitfinex highlighted that just $9 billion in Bitcoin so far had been taken and then sold by the government, including those in the US and Germany. Compared to the realized capitalization of Bitcoin since 2023, valued at $224 billion, this number is only 4% of the value added to the market.
As a result, Bitfinex believes that while the sales of confiscated BTC are considerable in terms of individual transactions, their overall impact on the market and BTC’s stability is not as great as it might initially appear.
Featured image from iStock, chart from Tradingview.com
