Bitcoin (BTC) teeters on the edge of closing June with a monthly loss and clinging to the critical $60,000 support level.
Unfortunately for the bulls, the BTC/USD pair might be headed for rougher waters with a series of bearish indicators pointing towards increased selling pressure in July.
Mt. Gox unlocking $9B in Bitcoin
One of the most significant bearish events in the cryptocurrency market in June was related to the long-awaited Mt. Gox repayments.
Mt. Gox, once the largest Bitcoin exchange, will repay 140,000 BTC worth around $9 billion to its creditors starting in early July 2024. This repayment follows a decade-long wait after the exchange's collapse in 2014 that led to the loss of over 850,000 BTC.
The impending distribution has raised concerns about increased selling pressure on the market, with analysts predicting a significant drop in Bitcoin prices due to creditors' potential to sell their received assets to realize profits, especially given Bitcoin's 16,000% price appreciation since the hack.
For instance, JPMorgan analysts, led by Nikolaos Panigirtzoglou, point out that recent behavior from Gemini creditors, who likely liquidated part of the $2.18 billion in Bitcoin following Gemini's May 29 announcement, supports this bearish argument.
For instance, analyst Degen Kid anticipates Bitcoin's price to drop toward $55,000 amid the Mt. Gox repayment in July, albeit being optimistic about the overall market outlook.
On-chain indicators detect increasin profit-taking
A significant number of Bitcoin investors may lock in profits at current price levels, anticipating that the market may be reaching its peak.
For instance, the 30-day average of Bitcoin's Adjusted Spent Output Profit Ratio (aSOPR)—which assesses the overall profit and loss of Bitcoin transactions—has increased from 1 to 1.03 since May.
A reading over 1 indicates more investors are selling at a profit and has coincided with market top formations in the past, as shown below.
Another on-chain metric, Net Unrealized Profit and Loss (NUPL), indicates potential upside exhaustion among Bitcoin buyers. NUPL is calculated as the difference between market cap and realized cap divided by market cap, representing the total profit/loss in all coins as a ratio.
That said, a Bitcoin NUPL reading over 0 indicates investors are in profit and an increasing trend in value means more investors are beginning to be in profit. This reading typically precedes market corrections, hinting the same for Bitcoin as its 30-day average NUPL treads around 0.54 on June 30.
BTC price bull pennant breakdown hints at $56K
The 4-hour Bitcoin chart meanwhile is painting a possible breakdown of a bull pennant, a pattern that develops when the price consolidates inside a triangle-shaped pattern following a strong move downward.
It resolves when the price breaks decisively below the lower trendline and falls to level at length equal to the height of the previous uptrend.
Applying the same technical rule on Bitcoin's four-hour (4H) chart brings the cryptocurrency's deepest price target for July at around $56,000—a max pain scenario.
Conversely, this bearish outlook may be avoided if the price breaks above the 50-4H exponential moving average (50-4H EMA; the red wave) at around $61,925. Such a bullish reversal scenario would put BTC's upside target for July at around its 200-4H EMA (the blue wave), or $64,770.