Can Bitcoin Recover Soon? Bitfinex Analysts Think So

Bitfinex suggests that the market may soon recover as significant BTC sales from Mt Gox creditors and the German government have already been factored in.

Bitcoin’s Market Correction and Recovery Potential
Despite Bitcoin (BTC) reaching its lowest level since February 26 and lingering around the $57,000 mark with considerable volatility, Bitfinex analysts see positive on-chain signals indicating that the leading cryptocurrency might not experience further downturns.

According to the latest Bitfinex Alpha report, market data from July 6 and 7 points to a potential local bottom for BTC.The recent Bitcoin correction was partly driven by substantial BTC sales from Germany’s Bundeskriminalamt (BKA) and the asset distributions from the defunct Mt Gox exchange creditors.

While the BKA has been moving large BTC amounts to exchanges, institutions, and over-the-counter desks, Mt Gox is in the process of repaying $9 billion in assets, including BTC and Bitcoin Cash, with most creditors expected to receive their claims this month.

These transactions have sparked BTC selling across various investor groups, heightening market fear, uncertainty, and doubt (FUD). However, Bitfinex analysts note that the actual impact of these sales might be less severe than initially thought due to the volume of BTC reaching exchanges.

Market participants anticipate a recovery once the market addresses the supply surplus, but Bitfinex believes the rebound could happen sooner as these sales have been absorbed into the market.
On-Chain Indicators Suggest Diminished Selling Pressure
Several on-chain indicators support this outlook, suggesting diminishing selling pressure. One such indicator is the Coinbase Premium Index, which reflects the percentage difference between BTC prices on Coinbase Pro and other centralized exchanges.

A low premium indicates strong selling pressure, typically from miners, funds, ETFs, and government entities. Although this premium was low in June, it has recently turned positive even as BTC prices fell, indicating reduced selling pressure on Coinbase.

Another indicator is the Spent Output Profit Ratio (SOPR) for short-term holders, which currently stands at 0.97. This metric shows that these investors are selling BTC at a loss, often a precursor to a price rebound.

Additionally, the average funding rate across all BTC perpetual trading pairs has turned negative for the first time since the May 1 bottom, further suggesting that BTC may be stabilizing or nearing a local bottom.

Bitfinex’s analysis highlights that while the market remains cautious, signs of a potential recovery are becoming more evident.

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