According to a report released on July 18 by asset manager ARK Invest, Bitcoin became oversold in June after the German government initiated a sell-off of 50,000 BTC, worth billions of dollars, which were confiscated during a 2020 police investigation into Movie2k, a platform for streaming pirated content.
The sell-off caused Bitcoin’s price to drop from over $70,000 at the beginning of June to below $55,000 during a brief dip in July.
The report focuses on the period up to June 30 but includes more recent data:
“Based on the realized profits/losses of short-term holders and miner outflows, Bitcoin appears oversold. The current levels of miner outflows suggest they are capitulating—a sign that typically precedes a bullish reversal.”
According to ARK, sustained investor demand for spot Bitcoin exchange-traded funds (ETFs) is another bullish signal. The report notes that the strong BTC sell-off did not trigger a mass exodus from spot Bitcoin ETFs. As of June 30, the spot price drop of BTC exceeded the 30-day percentage change in ETF inflows by 17.3%.
CoinShares reports that July saw billions of dollars of net inflows into Bitcoin ETFs, with around $1.35 billion flowing into funds in the week ending July 15. According to Thomas Fahrer, co-founder of the cryptocurrency data platform Apollo, BlackRock’s iShares Bitcoin Trust (IBIT) received $107 million in inflows on July 18 after nine consecutive days of positive inflows.
One risk to BTC’s continued strong performance is global economic data. According to ARK, corporate profits are gradually declining as pricing power diminishes, a sign of economic weakness.
Bitcoin’s price also faces potential obstacles from the defunct exchange Mt. Gox, which must repay approximately $9 billion in Bitcoin to creditors. However, unlike the sudden German sell-off, analysts suggest that creditors may choose to hold onto their BTC, mitigating any potential impact on the broader market.
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