Bitcoin’s price has been on a rollercoaster ride, dropping to its lowest level in months and hovering around $57,000. However, Bitfinex analysts believe that there may be a silver lining on the horizon.
The recent Bitfinex Alpha report suggests that a potential local bottom for Bitcoin is imminent. The correction in Bitcoin’s price was partly due to significant BTC sales by the German law enforcement agency and Mt Gox creditor redemptions. These movements triggered selling pressure across all investor cohorts, leading to fear, uncertainty, and doubt in the market.
Despite the sell-offs, analysts believe that the impact may not be as severe as initially thought. The market is expected to recover once it deals with the supply overhang. However, Bitfinex has pointed out that the market could bounce back sooner than expected, as the sales have already been factored into the prices.
On-chain indicators are showing signs of diminishing selling pressure. The Coinbase Premium Index, which measures the price difference between Coinbase Pro and other exchanges, has turned positive despite the falling BTC price. This indicates a decrease in selling pressure on Coinbase.
Additionally, the Spent Output Profit Ratio for short-term holders has reached a level where investors are selling BTC at a loss, which typically precedes a price rebound. The average funding rate for BTC perpetual trading pairs has also turned negative, suggesting that Bitcoin may be stabilizing or nearing a potential local bottom.
Overall, while the recent market movements have caused volatility and uncertainty, there are indications that Bitcoin may be on the path to recovery. Investors should keep an eye on these on-chain indicators to gauge the market sentiment and make informed decisions.