Bitcoin Oversold Following German Government Sell-Off, Says ARK Invest

ARK Invest published a report on July 18th discussing Bitcoin’s performance in June. The asset manager noted that Bitcoin appeared oversold following a significant sell-off by German authorities. 

In June, the German government sold 50,000 BTC confiscated from the streaming platform Movie2k in 2020. This sell-off pushed Bitcoin prices below $55,000, a notable drop from over $70,000 recorded in early June.

The ARK Invest report identified miner capitulation as a positive indicator for Bitcoin’s future prices. According to the report, miner capitulation often signals the bottom of a market cycle, suggesting potential upward momentum for Bitcoin.

Bitcoin ETFs attract significant inflows

The ARK Invest report also highlighted substantial inflows into Bitcoin ETFs. Despite the selling pressure from German authorities, investors continued to allocate funds to Bitcoin ETFs. The report emphasized that existing ETF investors refrained from cashing out, indicating strong confidence in the market.

Data from CryptoQuant supported ARK’s view. It showed that miner capitulation began after the April Bitcoin halving event. The event reduced Bitcoin miner yields, prompting mining firms to sell their BTC holdings to maintain liquidity and manage operations. 

On June 16th, Bitcoin ETFs saw inflows exceeding $400 million, with BlackRock’s IBIT receiving $260 million, the highest inflow since early July. Bloomberg analyst Eric Balchunas noted that the market performed better than expected. Initially predicting $15 billion in Bitcoin ETF growth within the first year of the SEC’s approval, U.S.-based ETFs have already reached a market share of over $16 billion in just six months. Inflows in the last two weeks alone exceeded $1 billion.

Potential impact of Mt. Gox rehabilitation program

Despite the positive market sentiment, Bitcoin prices may face challenges due to liquidation transactions from Mt. Gox creditors. Mt. Gox, which filed for bankruptcy in 2014, has started the disbursement process to repay its creditors. Recently, the defunct exchange transferred over 48,000 BTC to an unlabeled wallet address believed to belong to Kraken. Kraken is among the selected exchanges to facilitate this disbursement.

Following the transaction, Kraken acknowledged receiving the funds and emailed Mt. Gox creditors. Kraken promised to begin the payout process within two weeks. Nobuaki Kobayashi announced on July 16th that 13,000 creditors had already benefited from the rehabilitation program.

While ARK Invest remains bullish on Bitcoin due to indicators such as miner capitulation and substantial inflows into Bitcoin ETFs, the market faces potential volatility from the ongoing Mt. Gox rehabilitation program. The sell-off by German authorities and the upcoming payouts to Mt. Gox creditors could influence Bitcoin prices in the near term.

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