Bitcoin (BTC) is on the verge of ending June with a monthly loss and is currently holding onto the critical support level of $60,000. However, there are indications that the BTC/USD pair could face more challenges in July, as several bearish signals suggest increased selling pressure.
One of the major bearish events in the cryptocurrency market in June was the announcement of the long-awaited Mt. Gox repayments. Mt. Gox, which was once the largest Bitcoin exchange, will start repaying its creditors with 140,000 BTC, which is worth around $9 billion, beginning in early July 2024. This repayment comes after a decade-long wait following the collapse of the exchange in 2014, which resulted in the loss of over 850,000 BTC.
The impending distribution of funds has raised concerns about the potential for increased selling pressure on the market. Analysts predict a significant drop in Bitcoin prices as creditors may sell their received assets to realize profits, especially considering Bitcoin’s 16,000% price appreciation since the hack. JPMorgan analysts, led by Nikolaos Panigirtzoglou, point to the behavior of Gemini creditors who likely sold part of their $2.18 billion Bitcoin holdings following Gemini’s announcement on May 29, as evidence supporting this bearish argument.
Analyst Degen Kid anticipates that Bitcoin’s price could drop to around $55,000 in July due to the Mt. Gox repayment. However, Kid remains optimistic about the overall market outlook.
On-chain indicators also suggest an increase in profit-taking by Bitcoin investors at current price levels, indicating that the market may be approaching its peak. The 30-day average of Bitcoin’s Adjusted Spent Output Profit Ratio (aSOPR), which assesses the overall profit and loss of Bitcoin transactions, has risen from 1 to 1.03 since May. A reading above 1 indicates that more investors are selling at a profit, and historically, this has coincided with market top formations.
Another on-chain metric, Net Unrealized Profit and Loss (NUPL), suggests potential exhaustion among Bitcoin buyers. A reading above 0 indicates that investors are in profit, and an increasing trend in value indicates more investors are beginning to be in profit. This reading often precedes market corrections, suggesting a similar scenario for Bitcoin as its 30-day average NUPL hovers around 0.54 on June 30.
Looking at the 4-hour Bitcoin chart, there are signs of a possible breakdown of a bull pennant pattern. This pattern occurs when the price consolidates within a triangle-shaped pattern after a significant downward move. The pattern resolves when the price 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 suggests a potential price target of around $56,000 for 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, or $64,770.
Please note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risk, and readers should conduct their own research before making any decisions.