Adrian Fritz, Head of Research di 21Shares, has recently expressed interesting predictions regarding the future trend of Bitcoin and the trend of its price post-halving.
In particular, in the month of June, Bitcoin lost about 10% of its value, dropping from 67 thousand to 62 thousand dollars. The cause of this drop was the liquidity injections, mainly by the German government and the Mt. Gox reimbursements.
Furthermore, the decline in miner activities has contributed to this, as they are earning less profit due to the halving and higher energy costs. Let’s look at all the details below.
21Shares: causes of the Bitcoin contraction, forecasts and considerations post-halving
As anticipated, the month of June proved to be particularly critical for Bitcoin, which underwent a series of massive sell-offs. In particular, bringing its value down by about 10%, from 67 thousand to 62 thousand dollars.
A determining factor was the announcement by the German government regarding the sale of 50,000 units of BTC, seized from the illegal streaming site Movie2k, for a value of 3 billion dollars.
The first operations of this sale are already underway, as demonstrated by the transactions of the wallet involved on centralized platforms such as Coinbase and Desk.
Furthermore, the uncertainty about the reimbursements of Mt. Gox has increased the tension in the market, as the BTC reimbursements worth 8.6 billion dollars will start in July.
However, these refunds will be distributed over several months, reducing the risk of a sudden wave of supply.
This is especially because many of the creditors are long-term investors who believe in the potential of Bitcoin and tend to keep the asset in their portfolios.
The negative sentiment has been exacerbated by the sales of miners. In the span of 30 days, they have liquidated Bitcoin worth approximately 2 billion dollars, marking the largest sell-off of the past year.
These events are frequent after the halving (the last one occurred in April), when the miners’ returns are halved. Currently, the miners’ reserves are at their lowest levels since 2021.
Unlike in the past, the currently high energy costs are reducing profitability per computational unit, pushing miners to suspend some operations.
The computing power of the entire Bitcoin system has decreased by 15% compared to May, indicating a reduction in miner activity.
Futures market, RSI and sales
In the futures market, trading volumes have returned to February levels, around 35 billion dollars. Indicating therefore a lower attraction for speculative investments compared to the past.
The relative strength index (RSI) has reached the lowest level of the year, suggesting that Bitcoin has been excessively sold and could represent a buying opportunity for future investors.
This current parameter is even lower than the one recorded in March 2023, before the crisis of the American banks that had triggered a 60% rally.
In any case, according to 21Shares, this correction is not only “normal” for a volatile asset that has seen rapid growth in recent months, but also “healthy”.
The recent wave of sales will help reduce excessive speculation. Thus allowing for a solid consolidation and further development of the fundamentals of Bitcoin, which continues to trade at higher levels compared to previous economic cycles.
Wave of optimism and possible turbulence on the horizon for Bitcoin
The recent rise in the price of Bitcoin has triggered a wave of optimism in the cryptocurrency markets. However, this positive momentum could be short-lived.
Mt. Gox, a cryptocurrency exchange in Tokyo that once dominated the Bitcoin market, will begin reimbursing thousands of users at the beginning of July.
The total amount of refunds will be almost 9 billion dollars in tokens, a fraction of the 650,000-950,000 bitcoin stolen in 2014.
At the time, those stolen coins represented a significantly lower value, but with current prices, their value would be around 59 billion dollars.
This compensation comes after a long and complex bankruptcy process, characterized by delays and legal complications. Finally, on July 1st, the trustee appointed by the court announced the start of distributions to the approximately 20,000 creditors of Mt. Gox.
The refunds will be made in a combination of Bitcoin and Bitcoin Cash, one of the first variants of the original cryptocurrency.
Although this return represents good news for users who had lost their bitcoin in the hacker attack, it comes at a delicate time for the cryptocurrency market.
Last week, the price of Bitcoin dropped to $59,000, marking the second worst weekly decline of the year. The imminent influx of bitcoin from Mt. Gox could exert further pressure on the price, creating concern among some investors.
Despite the uncertainty caused by the Mt.Gox refunds, institutional investors and crypto whales continue to show interest in Bitcoin. This is demonstrated by the high number of ETF inflows recorded in the last 24 hours.
The spot Bitcoin ETFs continued to record inflows on July 1st, extending the positive streak to five consecutive days.
The total net inflow for the day reached 129 million dollars, indicating a continued interest and confidence of institutional investors in the cryptocurrency market.