Bitcoin is back down $57,000, after a brief rebound to $59,000 early in the week. Bitcoin has slumped 15% over the past month, based on sell pressure from Bitcoin Miners, sell pressure from Germany, and the beginning of Mt. Gox refunds.

This week, Greg Cipolaro, head of research at NYDIG, wrote in a note that the significance of these factors has been overstated. “While short-term emotions and psychology may dominate, our analysis indicates that the price impact from potential selling is likely exaggerated,” Cipolaro wrote. “We acknowledge that other factors may be influencing the market, but it is reasonable to view this as an opportunity created by irrational fears,” he added.

Even if all three entities sold their assets simultaneously — approximately 375,000 BTC as of June 9 — Cipolaro found that the recent BTC price decline was more significant than it would have been for stocks, based on Bloomberg’s transaction cost analysis (TCA), a widely used indicator for estimating the price impact of block sales of stocks. Cipolaro also addressed reports that miners are capitulating and selling their BTC en masse after this year’s halving event, stating that these claims are often overstated or inaccurate. NYDIG’s data showed that publicly listed mining companies actually increased their bitcoin holdings in June. Although BTC sales did increase slightly last month, they remained below levels seen earlier this year and last year.

Germany began selling bitcoin in June, and has since liquidated 30,997 BTC, impacting the crypto market significantly. BTC has dropped over 15% in the past four weeks, hitting a low of $53,550 last week. Currently, the wallet tied to the BKA holds 13,360 BTC ($784.96 million). The steady price action suggests the market is gradually becoming more comfortable with the divestment and potential selling by Mt. Gox creditors. According to Arkham Intelligence, the German Federal Criminal Police Office (BKA) has moved over 10,853 BTC, worth $637 million, to exchanges like Kraken and Coinbase, as well as market makers such as Cumberland and Flow Traders. This action continues the BKA’s proactive approach to liquidating BTC seized from a privacy website.

Source: X

After a 15% decline, the market seems to be growing more comfortable with the outflows from Mt. Gox and the German government. The spot Bitcoin ETFs are now seeing strong inflows again, indicating signs of a trend reversal as institutions confidently buy the dip.

Source: X

Even so, it is clear that Bitcoin is at a crucial stage in this market cycle, with traders unclear whether there is continued downside or a potential bottoming out. Data from CryptoQuant suggests that a major correction or the onset of a sustained bear market could be imminent, as the profit and loss index hovers around its 365-day moving average. Previous downward crossovers at this level preceded significant declines in May and November 2021. CryptoQuant’s bitcoin bull-bear market cycle indicator is also nearing a critical threshold, hinting at a possible descent into a bear market. A stagnant tether (USDT) market cap further indicates that a rally might be difficult, as historical recoveries have been linked to increased stablecoin liquidity, according to CryptoQuant.

However, Bitcoin whales have been accumulating during the recent downturn, with large holders increasing their stash by 6.3% over the past month, the fastest accumulation rate since April 2023. Germany’s aggressive selling of seized BTC appears to be nearing its end, with nearly 50,000 BTC from Movie2k seized in January now almost fully liquidated. Several bullish factors also suggest potential upside. An ether ETF has been approved in the U.S., and the continued growth of U.S. stock indices, with which Bitcoin has historically correlated, points to the possibility of further gains in 2024 despite signs of short-term exhaustion.

As Bitcoin miners struggle, this was reflected in a drop in Bitcoin’s mining difficulty from 83.6 terahash per second (TH/s) to 79.50 TH/s on June 5, a level not seen since March, just before the halving event in April. Mining difficulty is adjusted every two weeks and can either increase or decrease, depending on the speed of block generation. This adjustment keeps miners in check by ensuring that blocks are mined at a consistent rate. This recent drop is one of the largest since the collapse of the crypto exchange FTX in 2022, which caused bitcoin prices to plummet more than 10% in a week. Analysts at CryptoQuant noted the similarity, stating, “The network hashrate has experienced a 7.8% drawdown, comparable to the post-FTX collapse in December 2022.”

A downward adjustment means a proportional decrease in the network’s hashing power, which can benefit smaller miners and make previously unprofitable mining farms viable again. At current prices, only a few of the most popular mining machines remain profitable, creating a scenario that could mark a “local bottom” for BTC.

President Donald Trump’s recent shift towards cryptocurrency, despite his previous skepticism, may gain him some support among hesitant Republicans as he aims for a return to the White House in November, according to a poll released Wednesday by Paradigm, a crypto investment firm. As the presumptive Republican nominee, Trump’s positive comments about supporting the U.S. crypto sector have caught the attention of some voters, the poll conducted by Echelon Insights revealed. The snapshot of Republican sentiment showed that 13% of those who were not initially planning to vote for him now view him more favorably due to his stance on crypto. The poll indicated that most respondents (60%) believe Congress should establish regulations for crypto businesses, reflecting a general Republican dissatisfaction with the current financial system. “Republicans understand the appeal of crypto and support congressional action to establish clear and predictable rules,” wrote Katie Biber, Paradigm’s chief legal officer, and Alex Grieve, the company’s government affairs lead, in their analysis of the data.

The survey of over a thousand likely GOP voters was conducted in mid-June, prior to the televised debate that stirred the race between Trump and President Joe Biden. Trump is expected to secure his party’s nomination at the upcoming convention. The poll revealed that more than a quarter of Republicans surveyed (28%) have engaged in crypto ownership, with this involvement skewing towards younger, male, and non-white demographics. Trump remains in a tight race against President Joe Biden, according to national polling. Trump’s slight lead increased after the CNN debate, where Biden’s performance was perceived as poor and halting.

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