Bitcoin (BTC) is on the verge of ending June with a monthly loss and struggling to maintain the crucial $60,000 support level. However, there are indications that the BTC/USD pair could face more challenges in July due to bearish factors.
One of the major bearish events in the cryptocurrency market in June was the long-awaited Mt. Gox repayments. Mt. Gox, which was once the largest Bitcoin exchange, will start repaying its creditors with 140,000 BTC, amounting to around $9 billion, in early July 2024. This repayment comes after a decade-long wait following the exchange’s collapse in 2014, which resulted in the loss of over 850,000 BTC.
The upcoming distribution has raised concerns about increased selling pressure in the market. Analysts predict a significant drop in Bitcoin prices as creditors may sell their received assets to realize profits, especially considering Bitcoin’s remarkable price appreciation of 16,000% since the hack. JPMorgan analysts, led by Nikolaos Panigirtzoglou, point to the liquidation of part of the $2.18 billion in Bitcoin by Gemini creditors following Gemini’s May 29 announcement as evidence supporting this bearish argument.
Analyst Degen Kid anticipates a drop in Bitcoin’s price to around $55,000 in July due to the Mt. Gox repayment, although he remains optimistic about the overall market outlook.
On-chain indicators also suggest a potential increase in profit-taking by Bitcoin investors at current price levels, indicating a possible market peak. For example, the 30-day average of Bitcoin’s Adjusted Spent Output Profit Ratio (aSOPR) has risen from 1 to 1.03 since May. A reading above 1 suggests that more investors are selling at a profit, and historically, this has coincided with market tops.
Another on-chain metric, Net Unrealized Profit and Loss (NUPL), indicates a potential exhaustion of upside momentum among Bitcoin buyers. A NUPL reading above 0 signifies that investors are in profit, and an increasing trend suggests more investors are starting to be in profit. This reading typically precedes market corrections, further indicating a potential downturn for Bitcoin.
The 4-hour Bitcoin chart suggests a possible breakdown of a bull pennant pattern, which occurs when the price consolidates within a triangle-shaped pattern after a significant downward move. This pattern resolves when the price decisively breaks below the lower trendline and falls to a level equal to the height of the previous uptrend. Applying this technical rule to Bitcoin’s 4-hour chart indicates a potential price target of around $56,000 in July.
However, this bearish outlook can be avoided if the price breaks above the 50-4H exponential moving average (50-4H EMA) at around $61,925. In such a bullish reversal scenario, Bitcoin’s upside target for July would be around its 200-4H EMA, which is approximately $64,770.
It is important to note that this article does not provide investment advice or recommendations. Investing and trading in cryptocurrencies involves risks, and readers should conduct their own research before making any decisions.