Bitcoin experienced a sharp decline in June following the German government’s massive sell-off of 50,000 BTC, seized during a 2020 police sting operation against the Movie2k pirated content streaming platform, according to a report by ARK Invest released on July 18. This significant sell-off drove Bitcoin prices down from over $70,000 in early June to below $55,000 in July.
The ARK Invest report indicates that Bitcoin became oversold based on short-term holder realized profits/losses and miner outflows. The current miner outflow levels suggest miners are capitulating, which often precedes a bullish market reversal.
Another positive indicator for Bitcoin’s future is the strong investor interest in Bitcoin exchange-traded funds (ETFs). Despite the sharp sell-off, there was no mass exodus from spot Bitcoin ETFs. As of June 30, the drop in Bitcoin’s spot price exceeded the 30-day percent change in Bitcoin ETF flows by 17.3%.
July has seen substantial net inflows into Bitcoin ETFs, with approximately $1.35 billion added in the week ending July 15, according to CoinShares. BlackRock’s iShares Bitcoin Trust (IBIT) recorded $107 million in inflows on July 18, marking nine consecutive days of positive inflows, noted Thomas Fahrer, co-founder of crypto data platform Apollo.
However, Bitcoin’s strong performance faces risks from global economic trends. Falling corporate profits and diminishing pricing power indicate economic weakness, which could impact Bitcoin prices. Additionally, the impending repayment of $9 billion in Bitcoin to creditors of the defunct Mt. Gox exchange may also pose a potential threat. Unlike Germany’s abrupt sell-off, creditors might hold onto their Bitcoin, mitigating the impact on the market, according to industry analysts.
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