On Monday, the cryptocurrency market stabilized after several days of significant sell-offs.
During the morning session, the German government transferred over 10,000 bitcoins it held to cryptocurrency exchanges and market makers. As a result, the price of bitcoin briefly dropped below $55,000. However, according to Arkham Intelligence data, the German government address received 2,898 bitcoins worth approximately $163 million from exchanges such as Coinbase, Kraken, and Bitstamp, during the US stock market closing hours.
The Block’s Director of Research, Steven Zheng, analyzed the situation and suggested that exchanges may have returned the bitcoins because they were unable to sell them at the target price. He stated, “Considering that some bitcoins have been returned from Coinbase to the German government address, it can be assumed that they are unsold bitcoins and part of the sales agreement between cryptocurrency exchanges and the government.”
According to Bitpush data, BTC touched approximately $55,200 earlier on Monday afternoon and then rebounded to $56,662.40 after the US stock market closed, representing a 0.58% increase in 24 hours.
Among the top 200 tokens by market capitalization, altcoins experienced mixed performance, with more declines than gains. Aelf (ELF) led the gains, rising by 21.5% with a trading price of $0.421, while Celestia (TIA) and Curve DAO Token (CRV) rose by 14.5% and 10.1% respectively.
Currently, the total market capitalization of cryptocurrencies is $2.07 trillion, with bitcoin’s market dominance at 53.5%.
In the US stock market, the S&P 500 and Nasdaq 500 indices rose by 0.10% and 0.28% respectively, while the Dow Jones index fell by 0.08%.
The impact of the German government’s sell-off may have been exaggerated. According to Arkham’s data, almost half of the German government’s selling progress has been completed. Since the start of the sell-off last month, their BTC holdings have decreased from nearly 50,000 coins to 27,461 coins, with a current value of $1.5 billion.
Recent headlines have focused on events such as the German government’s sell-off and Mt. Gox refunds. Many analysts believe these are the main reasons for the recent bitcoin price decline, but Bitfinex analysts attribute the decline to normal seasonal weakness.
Bitfinex analysts stated, “It is worth noting that the actual market value of bitcoins entering the market since 2023 amounts to $224 billion. In contrast, the amount of bitcoins confiscated and subsequently sold by governments including the United States and Germany is only about $9 billion. This accounts for only 4% of the total accumulated actual value increase in the market since the beginning of 2023.”
The analysts added, “Although the nominal value is large, the actual amount of bitcoins transferred to exchanges is only a few hundred million dollars. This indicates that the impact of government-seized bitcoins on the market and the relative oversupply is relatively small. This suggests that while the sale of seized assets is important in individual transactions, their overall impact on market dynamics and bitcoin price stability is not as significant as initially perceived.”
Institutional investors see it as a buying opportunity. Despite the market decline, data from CoinShares shows that inflows into digital asset investment products reached $441 million last week.
Among them, bitcoin investment products accounted for the largest share (90%) of the total inflows into cryptocurrency products ($398 million). In terms of regions, the inflow of funds mainly came from the United States, with an inflow amount of $384 million. Other significant buyers came from Hong Kong, Switzerland, and Canada, with inflow amounts of $32 million, $24 million, and $12 million respectively. Germany had an outflow of $23 million.
Bitfinex analysts suggest that BTC may have reached a potential local bottom. According to data provided by Bitfinex, the funding rate for BTC perpetual contracts has turned negative for the first time since hitting bottom on May 1.
Historically, periods of negative funding rates combined with low short-term SOPR values (a financial indicator used to measure the profit or loss realized by a specific group of investors’ wallets on a given day) typically mark the bottom of price adjustments.
The analysts stated, “This could be seen as an increase in bearish sentiment, but it also reinforces the view that BTC may be stabilizing or approaching a potential bottom as the balance of buying and selling pressures evolves. Negative indicators indicate significant selling pressure or a seller-dominated market, but they may also indicate market overselling. When this oversold condition coincides with a rebound in SOPR, it usually indicates that the market is bottoming out.”
Secure Digital Markets analysts stated in their report, “The RSI indicator shows that bitcoin has become oversold for the first time since August, right before the upward squeeze. For bitcoin to gain further momentum, the price needs to break through $58,500, and breaking through $60,500 marks a return to the bullish zone.”
Ed Hindi, Chief Investment Officer at Tyr Capital, believes that the current pullback is only temporary and insists that the price of BTC will reach six figures by the end of the year. Hindi stated in a CNBC interview, “Due to miners and government selling off bitcoin inventory, bitcoin is currently in a correction range, but we believe long-term investors and speculators will continue to buy on dips. We see no reason to change the target of $100,000 for bitcoin by the end of 2024.”
