Bitcoin appears to have found support from the $60,000 psychological level as overbought conditions set it.
BTC price has been in a downtrend since June 6, dropping 19% from a high of $71,974 to a low of $58,414 on June 24. The big crypto lost key support levels during this sell-off, including all the major moving averages, the psychological levels at $70,000, $68,000, and $65,000.
Several factors have accelerated Bitcoin’s drawdown over the last few days. On June 19, the German government began a massive Bitcoin sell-off. Arkham Intelligence said Bitcoin wallets connected to the German government moved nearly 6,500 BTC on June 19.
This is part of a Bitcoin stash seized from the operators of a movie piracy website. This move is part of a recent trend of large-scale Bitcoin transactions by German authorities, with substantial funds being transferred to major exchanges like Coinbase, Kraken, and Bitstamp, hinting at further sales.
The nearly 50,000 Bitcoin, originally seized from the operators of Movie2k.to, a film piracy site last active in 2013, were handed over to the German Federal Criminal Police Office (BKA) in January following a voluntary surrender by the suspects.
Also adding to the sell-side pressure is the payments from the defunct crypto exchange Mt. Gox to its creditors planned for next month. The collapsed Japanese crypto trading platform has said that beginning in July 2024, it would start distributing recovered Bitcoin (BTC) and Bitcoin Cash (BCH) to creditors.
After the Mt. Gox exchange collapsed in 2014 due to a massive cyberattack, a restoration strategy was initiated. This represents a significant advance in that endeavor.
This is expected to add to the sell-side pressure as these creditors have waited over a decade to recover their funds. Note that the Bitcoin price has rallied more than 8,000% since 2014. Some of these investors, who may have millions in profits, may decide to cash in at current rates.
The chart below shows that BTC’s price is attempting a rebound after finding support from the $60,000 psychological level. This is a critical level for the pioneer cryptocurrency, as it has provided support since the end of February. At the beginning of May, an attempt was made to pull the price below this level, but the bulls pulled the price back up, resulting in a 27.5% rally to $72,000.
If the same scenario plays out, BTC bulls will build up on the ongoing momentum, taking the price back above all the major moving averages, first toward the $65,000 psychological level and later to the stubborn resistance at $72,000. This would result in an 18% uptick from the current price.
This positive outlook was supported by the upward movement of the relative strength index (RSI) away from the oversold region. The increase in price strength from 25 to 30 over the last 24 hours suggests that the downtrend has lost momentum, and as bulls buy more on the dips, they are ready to scale the price upward.
On the other hand, the price strength at 30 suggested that the market conditions still favored the downside, with the bears still in control of the price.
As such, a daily candlestick close below the $60,000 level would see the BTC price drop to revisit the range low at $56,500. This would bring the total losses to 7.5% from the current levels.