Key Points
- Bitcoin ETFs see a $438 million inflow in two days.
- The cryptocurrency is down about 20% since June.
- Investors are betting Bitcoin will rally despite the forces of the market.
- Mt. Gox and German police sales lead to supply concerns.
From early June to today, Bitcoin, the first digital currency, fell heavily by roughly 20 percent. Even so, these developments have not dissuaded traders; they have only caused panic buying.
Over just a couple of sessions this week alone, USD-pegged bitcoin exchange-traded funds (ETFs) received $438 million in net inflows as Bloomberg data compiled on Tuesday revealed.
US #Bitcoin #ETFs have seen a net inflow of $438 million over the past two trading sessions, data compiled by #Bloomberg show.#CryptoNews 👇https://t.co/lnudu9PV8P
— Crypto-00711 (@00711Crypto) July 10, 2024
The Mt. Gox and German Police Factor
In recent times, the main driver for the drop in the price of Bitcoin was people’s reaction to what happened at Mt.Gox and the German Federal Criminal Police Office (Bundeskriminalamt).
The defunct crypto exchange has been returning around 8 billion dollars’ worth of bitcoins back to its creditors which raised worries concerning potential oversupplying in the market.
At the same time, Germany’s law enforcement agencies began selling some of 50 thousand BTC that had previously been seized from one pirated site. As a consequence, those actions combined provoked anxiety about a possible glut of supply factors contributing to cryptocurrency decline.
“The long-term bull case is underpinned by it [the fact] that so many investors still don’t own bitcoin,” opined Charlie Morris, ByteTree’s CIO. “This supply storm will soon pass.”
Investor Sentiment and Market Dynamics
Current market pressures notwithstanding, Bitcoin has shown resilience lately. On Tuesday it hit an intraday high above $58k – adding up to a daily gain of 3.3%. However, it is still about $15k below its March record high.“There is a known overhang and big concern about supply in the market from Mt Gox and German prosecutors with regards to this liquidation. Markets are accepting of this as it proceeds toward the final sell-off,” Chris Weston, Pepperstone’s head of research, wrote.
The Long-Term Outlook
In just two days, $438 million was directed towards Bitcoin ETFs, indicating that investors have strong faith in Bitcoin’s long-run prospects. The current dip seems to be a buying opportunity for many observers.
Assuming sales like those of Mt.Gox and the German police remain finite, speculators assume that after these pressures finally ease off; there will be stabilization or even appreciation of Bitcoin values.
To sum up, significant liquidations pose immediate challenges to Bitcoin; nevertheless, heavy investments in Bitcoin ETFs indicate optimism about future growth. The present decline is viewed by investors as an attractive entry point awaiting a temporary supply shortage before they stabilize back again later on.
