Can BTC rebound from the recent market challenge?

• Mt. Gox continues moving Bitcoin to exchanges for repayments to creditors.
• The FOMC held US interest rates steady, resulting in a BTC price decline.
• US Senator Cynthia Lummis officially introduced the Bitcoin Act in the Senate.
• Michael Saylor’s MicroStrategy holds 226,500 Bitcoins at an average cost of $36,821 each.
• On-chain data shows reduced selling pressure.

Bitcoin’s (BTC) price failed to close above $70,000 at the beginning of the week and dropped to $64,000 by Friday. Mt. Gox continues moving Bitcoin to exchanges for repayments to creditors while the Federal Open Market Committee (FOMC) decided to hold US interest rates steady. US Senator Cynthia Lummis officially introduced the Bitcoin Act in the Senate, and Michael Saylor’s MicroStrategy holds 226,500 Bitcoins, all resulting in a decline in Bitcoin’s price this week.

Mt. Gox continues the repayment to creditors

According to data from Akram Intelligence, the Mt. Gox token balance has decreased from 80,000 to 33,000 BTC this week. The Token Balance history shows that since the start of this week, Mt. Gox holdings have been reduced from $5.3 billion to $2.1 billion.

This constant BTC transfer activity from Mt. Gox to exchanges for reimbursement to the creditors may have triggered FUD (Fear, Uncertainty, Doubt) among traders, potentially contributing to a decline in Bitcoin’s price this week. 

Mt. Gox Token Balance chart

Mt. Gox Balances History chart

US Fed leaves rates unchanged

The US Federal Reserve (Fed) adhered to expectations in its Wednesday FOMC meeting by keeping interest rates unchanged at 5.25%-5.50%. Sentiment data shows an initial decline in crypto prices as traders had anticipated a rate cut for the first time since March 15, 2020. While initial emotional sell-offs have impacted the market, stabilization is expected, with a potential significant rebound if aggressive whale accumulation and increased crowd negativity occur.

US Senator officially introduces Bitcoin Act 

US Senator Cynthia Lummis officially introduced the Bitcoin Act in the Senate on Wednesday. The Bitcoin Act establishes a strategic Bitcoin reserve to serve as an additional store of value to bolster America’s balance sheet and ensure the transparent management of Bitcoin holdings by the federal government.

“As families across Wyoming struggle to keep up with soaring inflation rates and our national debt reaches new and unprecedented heights, it is time for us to take bold steps to create a brighter future for generations to come by creating a strategic Bitcoin reserve,” said Lummis. 

The bill aims for the US to purchase 1 million BTC over five years, signaling institutional interest and potential government backing for Bitcoin and further enhancing its legitimacy and appeal.

Michael Saylor’s MicroStrategy holds 226,500 Bitcoins at an average cost of $36,821 each

MicroStrategy Incorporated (MSTR), the largest corporate holder of Bitcoin and the world’s first Bitcoin development company, reported its financial results for the three months ending June. The company now holds 226,500 bitcoins, reflecting a market value 70% higher than its cost basis. Since the beginning of Q2, MicroStrategy acquired 12,222 bitcoins at an average price of $65,882 per Bitcoin, bringing its total bitcoin holdings to $8.3 billion, or $36,821 per Bitcoin. Additionally, the company purchased 169 Bitcoins in July for $11.4 million.

“On the adoption front, we are extremely optimistic with the improved understanding of Bitcoin and the increasing support for the ecosystem from bipartisan politicians and institutions on display at the Bitcoin 2024 Conference in Nashville. We also continue to see increased global adoption of our cloud-powered BI and AI software, achieving another quarter of strong double-digit growth in both subscription revenue and subscription billings,” said Phong Le, President and Chief Executive Officer of MicroStrategy.

Bitcoin on-chain data shows reduced selling pressure

According to CryptoQuant’s Bitcoin Supply in Loss (%) data, this metric indicates the percentage of the total Bitcoin supply held at prices higher than the current market price, reflecting the proportion of Bitcoin that would result in a loss for holders if sold at today’s price.

Currently, the Supply in Loss (%) is at 16.31, indicating that a relatively small portion of the Bitcoin supply is at a loss. Historically, such levels suggest that most investors are in profit, which can lead to confidence in the market. When the Supply in Loss (%) is low, fewer investors are pressured to sell at a loss. This can reduce selling pressure and provide a foundation for price stabilization or recovery.

Bitcoin Supply in Loss % chart

Is BTC out of the woods?

Bitcoin’s price retested the ascending trendline support on Thursday, coinciding with the 50% Fibonacci retracement level at $62,736 (drawn from a swing high of $71,997 on June 7 to a swing low of $53,475 on July 5), establishing it as a critical support zone.As of Friday, Bitcoin is trading at $64,350, down 1.5% in the day. 

If Bitcoin continues to decline and closes below the ascending trendline and the 50% Fibonacci retracement level, it could drop 10% to revisit the daily low of $56,405 from July 12. 

The Relative Strength Index (RSI) on the daily chart has briefly fallen below the neutral 50 level, and the Awesome Oscillator (AO) is approaching a similar decline; sustained weakening in these momentum indicators could signal strong bearish pressure and further declines in Bitcoin’s price.

BTC/USDT daily chart

However, a close above the $69,648 weekly resistance level would change the market structure by forming a higher high on the daily timeframe. Such a scenario might drive a 3% rise in Bitcoin’s price to retest its June 7 high of $71,997.