Bitcoin Price Big Dump Bottom Analysis: ETF Buying Pressure May Become the Key to Stop the Fall

The price of Bitcoin has quickly fallen after recently breaking the important support level of $56,000. Traditional technical analysis has made it difficult to determine the bottom position. In this moment of market panic, we need to return to the fundamentals and analyze the state and motivation of the buyers and sellers of Bitcoin from the perspective of supply and demand, in order to find the best buying opportunity in this complex market.

Buy Order Analysis: ETF May Bring the First Wave of Bottom Fishing Power

In the long run, the macro environment in the second half of this year is favorable for Bitcoin:

1. The U.S. may cut interest rates, stimulating the rise of risk assets.
2. The probability of Trump's victory increases, which may improve the regulatory environment for cryptocurrencies.

Recently, Bitcoin has shown a high correlation with the US stock market. The big dump in the last two days may partly be due to the Bitcoin spot ETF being closed for trading and unable to be subscribed.

From the CME futures trading volume, institutional investor sentiment is relatively stable, possibly waiting for a bottom-fishing opportunity. The performance after the ETF reopens on July 5th is worth paying attention to, where intraday trading volume and after-hours net capital inflow are important indicators. If there is a high trading volume or net capital inflow, it may signal a stop to the market's fall.

Sell Order Analysis: German Government and Mt.Gox Compensation or Pressure

The Bitcoin seized by the German government may be the largest source of selling pressure in the short term. Currently, about 8,080 coins have been transferred out, with 42,270 coins remaining unsold, and there is still uncertainty regarding future movements.

Regarding Mt.Gox, the actual selling pressure may be lower than market expectations. It is estimated that of the 142,000 Bitcoins to be compensated, approximately 70% have already been acquired by institutional buyers. The remaining 30,000 to 40,000 may bring selling pressure. On July 5th, about 50,000 Bitcoins have been transferred out, of which 1,544 have entered exchanges, and 47,000 have been transferred to a new address with no movement so far.

In addition, miner sell-offs are also one of the influencing factors. As mining profits have dropped to their lowest in two years, some miners may be forced to liquidate and exit.

Conclusion

The buying pressure is based on long-term optimism, while the selling pressure stems from panic caused by special events. These non-replicable events may provide buying opportunities for long-term Bitcoin investors. Historically, the market's digestion of the emotional impact of special events typically does not exceed two months. This round of decline began on June 7, and it is expected to gradually be digested after August 7. The maximum single-day drop recorded in the past two days may represent the lowest point of this round of decline.