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.

Bitcoin has experienced a downturn in recent days, slipping below the 120-day moving average and hitting a low of $53,219 on Friday. This marks the first time BTC has fallen below the 120-day MA since Feb. 26.

The cryptocurrency exchange Bitfinex, in its Alpha-112 report, anticipates that Bitcoin may be nearing a potential local bottom, suggesting that the recent decline could be coming to an end.

In the report, Bitfinex highlights the recent heavy sell-offs of BTC, which might have impacted the crypto asset negatively, leading to the noted declines in the past few days.

According to the report, in a move that was both expected and drastic, BTC took a hit, slipping below the 120-day range and hitting a low of $53,219 for the first time since Feb. 26. This move aligns with Bitfine's prediction for a market correction and an increase in volatility. However, 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 by the German law enforcement agency, the Bundeskrimanalamt (BKA), and others. Over the past few weeks, the German government has carried out several large 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 partially attributes the sell-offs 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 is reported to have moved over 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 large 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 only $9 billion in Bitcoin 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.

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