After the big drop, is the bottom still at the waist of the mountain? The tug-of-war between bulls and bears is unfolding

Author: Climber, Golden Finance

On July 5, the crypto market experienced another significant drop, with BTC briefly falling below $53,500. As of the time of writing, BTC has risen to $58,000. However, whether this is the best time to buy the dip is known only to the hand behind the market.

Similarly, whenever the crypto market undergoes a deep correction, there is always a divergence of opinions between bulls and bears, with a plethora of noise affecting investment judgments. The biggest difference in this downturn compared to previous ones lies between Bitcoin and altcoins.

In October last year, at the beginning of the bear market, BTC fluctuated around $25,000, and then rose all the way to $73,777. Currently, BTC has dropped about 27.5%, but the vast majority of altcoins have erased their gains and fallen back to the starting point of this round of market. Mechanism Capital co-founder even stated that over 98% of altcoins have peaked in this cycle. In summary, altcoins are struggling to bear the weight of further declines, but currently, both bulls and bears in the crypto market still have differing views, each with their own rationale.

1. Bullish Sentiment and Potential Positives:

• Matrixport: The U.S. SEC is expected to approve a spot Ethereum ETF this week, which could lead to a rebound in ETH prices. Due to the holiday on July 4, the SEC may delay its decision until the week of July 8. If the SEC takes action this week, ETH prices could rebound.
• Block founder Jack Dorsey: BTC could replace the dollar, and BTC is expected to reach $1 million. Over time, people will gradually recognize the value and power of BTC, which has the potential to replace the dollar. This will take some time, and people will come to understand the value of this system.
• Blockstream CEO: Historically, there have been six instances of a 30% drop during bull markets, suggesting buying the dip. Since this drop is about 26%, the recent decline is not significant.
• Fundstrat Global Advisors research director: BTC is expected to rise to $150,000 after the Mt. Gox distribution is completed. One of the biggest bearish factors will disappear in July, which I believe is a reason for expecting a significant rebound in the second half of the year.
• 10x Research: Bitcoin seems oversold in the short term and may see a rebound. The target for Bitcoin's drop to $55,000 has been reached, and macroeconomic positives are expected next week. Additionally, the U.S. SEC may approve the Ethereum ETF, which could trigger positive momentum in the short term. However, it is not considered a significant buying opportunity in the medium term.
• GSR co-founder: Bitcoin still has enough time to reach new highs before the end of the year. The amount to be paid by Mt. Gox will become a "burden for the third quarter," "which is almost as much as the number of Bitcoins mined in the first year after the halving. However, once this is digested, there will still be enough time for Bitcoin prices to reach new historical highs before the end of the year."
• Analyst: The daily RSI indicator for Bitcoin shows a clear bullish divergence signal. Encouraging signals have been seen in the relative strength index (RSI) for Bitcoin on the daily timeframe, including bullish divergence.
• CryptoQuant founder: This Bitcoin cycle is different, with many institutional capital waiting to enter. This cycle is special, with different sources of funds; spot Bitcoin ETFs currently account for a quarter of total spot trading volume, indicating that the new incoming funds are more mature than ever before, and I believe there will be more mature capital in the future. Mature capital typically has diamond hands, and there is still much institutional capital waiting to enter this field, with channels now open for them.
• CryptoQuant analyst: The Bitcoin miner capitulation indicator is close to the bottom level after the FTX collapse, which may signal a market bottom. Specifically, the Bitcoin miner capitulation indicator is nearing the market bottom level after the 2022 FTX collapse, which may indicate that the BTC market is bottoming out. Miner capitulation refers to some miners reducing operations or selling the BTC they mined to sustain their livelihoods or hedge risks.
• This is similar to the situation at the end of 2022 when BTC price bottomed at $15,500, after which BTC rose over 300% in the following 15 months.
• Rekt Capital: The longer Bitcoin consolidates after the halving, the better the current cycle will synchronize with traditional halving cycles.

Bullish Factors:

• CryptoQuant: Selling pressure from Bitcoin miners is weakening, which could lead to upward momentum if absorbed.
• Crypto analyst Ash Crypto: FTX's repayment to creditors will become the biggest catalyst for rising cryptocurrency prices.
• People are worried about the MT.GOX crash and other bearish factors, but some factors will drive the crypto market to new highs, such as FTX's plan to distribute over $16 billion to its creditors, with August 16 being the deadline for FTX customers to vote, and Judge Dorsey planning to make a decision on October 7.
• If the court approves, FTX will repay creditors within two months. According to the timeline, this will occur between Q4 2024 and Q1 2025, perfectly aligning with other bullish factors (such as interest rate cuts, implementation of accounting rules by the Financial Accounting Standards Board, and the results of the U.S. elections). The influx of $16 billion will enter the cryptocurrency market and become the biggest catalyst for price increases.
• Financial Times: Former President Trump may return to the White House, which would trigger a significant surge in Bitcoin's value. Due to the former president being "considered supportive of cryptocurrency positions and policies," the concept of "Trump trades" is becoming increasingly popular among cryptocurrency traders. Analysts believe that Trump's victory could lead to a substantial increase in Bitcoin, potentially reaching another historical high in August and hitting $100,000 on election day.
• Other bullish factors include: Japanese listed company Metaplanet repeatedly purchasing BTC, cumulative net inflow of $238.4 million into U.S. spot Bitcoin ETFs in the first week of July, Dell's founder potentially buying a large amount of Bitcoin, and Sony planning to restart the acquired cryptocurrency exchange Whalefin.

2. Bearish Sentiment and Potential Negatives:

• Gold advocate Peter Schiff: The BTC bear market has a long way to go, and ETH may drop to $1,500. Currently, it is "at a critical support level," and if the support level is unstable, prices could drop significantly.
• So far, there are no signs of panic. Bitcoin may need to drop significantly before investors finally capitulate. This could happen as early as next week, especially after another large-scale sell-off this weekend.
• Andrew Kang: Over 98% of altcoins have peaked in this cycle, and buying the dip too early is a common investment mistake. One of the most common mistakes in the crypto market is buying too early when the trend shifts from rising to falling. Adjustments after a major market structure collapse are often deeper and longer than expected. Bitcoin is in a transitional phase towards becoming a super-cycle asset, exhibiting characteristics of both previous cycles and mature macro assets. eToro analyst: BTC's performance will further deteriorate in the coming days, and a market reversal requires a bullish catalyst event. The current selling activity is clearly unsettling investors, which often triggers more selling. Prices will remain weak in the short term until the market receives a catalyst to push prices up.
• Analyst Axel Adler Jr: The unrealized profit indicator on the Bitcoin chain may trigger further selling. Currently, ordinary investors have realized 84% of unrealized profits from their Bitcoin investments. The price is close to the average of $52,200 (PR Bands)—this would reduce unrealized profits by about 14%, and investors may choose to take profits due to concerns about further price declines.
• Material Indicators: Bitcoin faces technical resistance at the 200-day moving average; if Bitcoin fails to overcome this, be prepared for the market to test support levels in the $50,000 to $53,000 range.
• Ali charts data: Capital continues to exit the crypto market, dropping from over $110 billion in March to today's $20 billion.

Bearish Events:

• Binance: Bitcoin miners have set a record for the longest consecutive net selling period since 2017.
• Lookonchain: The German government has transferred a total of 13,466 BTC since June 19 and still holds 39,826 BTC (as of July 7).

Mt. Gox compensation continues for about two months, the FTX ruling date is undecided, regulatory uncertainty, and large token unlocks in crypto projects, etc.

Summary

Regarding the current judgment of the crypto market on future trends, bullish voices still dominate. The main reasons behind this are that bearish factors such as government actions, ETFs, miner sell-offs, and Mt. Gox compensation have already been released, while there are many expected bullish factors in the second half of the year, such as interest rate cuts, elections, FTX debt repayment, and the approval of the Ethereum ETF, etc. Especially the theory of a crypto bull market cycle makes many investors optimistic about future trends.

However, investors still need to be aware that the crypto market is extremely risky and easily influenced by bearish factors, so it is essential to safeguard their principal at all times.