Bitcoin Price Hits Bottom and Rebounds? ETF Buying May Be the Key to Stopping the Fall

Recently, the price of Bitcoin has rapidly fallen below the important support level of $56,000, making traditional technical analysis difficult to predict the bottom. As market panic spreads, we might as well return to the fundamentals, analyze the supply and demand relationship of Bitcoin, and study the status and dynamics of buyers and sellers, in order to find the best buying point in the complex market.

Currently, the sell orders mainly come from a certain government's disposal, compensation from a certain exchange, as well as some profit-taking and miner sell-offs, primarily conducted through cryptocurrency exchanges, which can be tracked through on-chain activity. The buy orders mainly come from U.S. Bitcoin spot ETF investors, participating through stock accounts. The intraday trading volume of the ETF and the capital flow after hours are worth paying attention to.

From a macro perspective, the potential interest rate cuts in the U.S. and changes in the political situation are favorable for risk assets. Analysis of the correlation between Bitcoin prices and U.S. stocks over the past six months reveals that the recent sharp fall is related to the ETF suspension of purchases. Looking at the futures trading volume of a certain commodity exchange, institutional investor sentiment remains stable, possibly waiting for a bottom-fishing opportunity.

The performance of the ETF after the resumption of trading on July 5 will be an important indicator. The overall optimistic sentiment in the U.S. stock market may drive ETF buying, with intraday trading volume and after-hours net inflow of funds being the core observation indicators. Higher trading volume represents bottom-fishing enthusiasm, while net inflow of funds can inject confidence into the market.

On the sell side, there is still a large amount of Bitcoin disposed of by a certain government that remains unsold, which is a short-term uncertainty factor. Among the Bitcoin compensated by a certain exchange, it is said that the majority has been acquired by institutions, and the actual selling pressure may be lower than expected. In addition, miners' selling has increased with the fall in coin prices, but it may ease with the stabilization.

In summary, long-term benefits coexist with short-term selling pressure. Historical experience shows that the market typically digests the selling pressure from special events within two months. This round of decline began on June 7, and it is expected to gradually be digested after August 7. Recently, a record single-day decline has been reached, which may have touched the bottom of this round of adjustment.