The Bitcoin market faced a significant downturn today. The cryptocurrency fell from a high of $61,055 to a low of $57,800. As of now, Bitcoin is trading at $58,854.99, marking a 3.60% decline. Ethereum and Solana followed suit, dropping by 4.40% and 8.96%, respectively.
Quick Take
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Bitcoin plunges to $57,800, affecting the entire crypto market.
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The Crypto Fear and Greed Index shows increased fear among investors.
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Despite the dip amid crypto whale sell-offs, retail investors are buying the dip.
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Upcoming repayments from Mt. Gox are expected to affect the market.
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Fundstrat’s Tom Lee remains optimistic about Bitcoin's long-term potential.
Bitcoin Takes a Hit
BTC/USDT price chart | Source: KuCoin
Bitcoin is currently 20.2% below its all-time high of $73,750.07, reached in March 2024. This dip brings Bitcoin to a two-month low. Experts link this drop to the impending Mt. Gox fund repayments, which will be made in Bitcoin and Bitcoin Cash. These repayments might put selling pressure on the market.
Read more: Will $10 Billion in Bitcoin Repayments from Mt. Gox Weaken BTC Price?
Can BTC Drop to $48-$50k?
Not everyone shares Lee's optimism. Kudret Ayyldr, research manager at GCM Investment, suggests that Bitcoin's inability to stay above $67,500 could lead to a further drop to the $48-50K range. This prediction reflects the current market's uncertainty and the possibility of further corrections.
Crypto Whales Sell Millions of BTC, but Retail Investors Buy the Dip
‘Buy the dip’ trends on social media | Source: Santiment
The market saw significant sell-offs by crypto whales. According to a report on BeInCrypto, a whale wallet deposited 1,800 BTC, worth $106.08 million, into Binance. This large deposit suggests a potential sale. Over the past week, this whale has transferred 5,281 BTC, worth around $423 million, to Binance.
Despite the bearish market, retail investors are buying the dip aggressively. Data from Santiment shows that mentions of "buy the dip" on social platforms like Reddit, X (formerly Twitter), 4chan, and Bitcoin Talk have doubled. Santiment's data indicates that retail buyers see this as an opportunity to accumulate Bitcoin below $60,000. This behavior indicates that many see the current dip as a buying opportunity.
Crypto fear and greed index | Source: Alternative
The Crypto Fear and Greed Index is at 44, indicating fear in the market. On June 25, it hit an 18-month low of 31. This index reflects investor sentiment, and the current score suggests a cautious market environment.
Mt. Gox Repayments Weigh the Market Down
Tom Lee, founder of Fundstrat, attributes the negative sentiment to the upcoming Mt. Gox repayments. Mt. Gox will return $9 billion worth of Bitcoin to its creditors in July. This situation has created concerns that a significant sell-off might occur if creditors decide to liquidate their recovered Bitcoin.
Despite these concerns, Lee remains bullish. He predicts that Bitcoin can hit $150,000 before the end of 2024. He believes that the removal of the Mt. Gox overhang will lead to a sharp market rebound in the second half of the year.
Notional Open Interest in Bitcoin Futures Drops by 18%
Bitcoin open interest-weighted funding rate | Source: CoinGlass
The futures market shows mixed signals. Notional open interest in Bitcoin futures has dropped by 18% over the past month, as per a report on CoinDesk. However, open interest in BTC terms has remained steady. This suggests that while the market has seen a reduction in bullish bets, traders are still placing long positions.
Positive funding rates indicate a bias for bullish bets. This, coupled with steady open interest, suggests that traders are hopeful for a market rebound once the selling pressure subsides.
Spot and Options Traders Place Bullish Bets
Activity in the spot and options markets also indicate a potential upside. Crypto whales have been buying the dips since late June. Margin long positions have steadily increased, showing continued confidence among large investors.
BTC margin long positions | Source: CoinGlass
QCP Capital reports that traders are buying topside bets in the options market, anticipating a year-end rally. This behavior aligns with the observation of significant interest in longer-term options at higher strike prices.
Conclusion
The Bitcoin market is currently experiencing a significant downturn. However, retail investors and some large players remain bullish, buying the dip and placing long positions. The upcoming Mt. Gox repayments are expected to create short-term volatility, but experts like Tom Lee remain optimistic about Bitcoin's long-term potential. The market's current state reflects a complex mix of fear and hope, with investors watching closely for signs of a rebound.
Crypto analyst Cold Blooded Shiller advises caution. He suggests that traders adapt to market momentum but also emphasizes the importance of patience. He recommends avoiding active trading during such volatile conditions and instead focusing on strategic patience until the market stabilizes.
