Bitcoin Continues to Struggle – Here Are 3 Factors That Could Spark a Price Recovery

Since the beginning of June Bitcoin has been grappling with significant volatility, struggling to regain its bullish momentum.

According to recent analysis, Bitcoin may have hit a local low after dropping to $53,219 on July 3. This decline was driven by fears of substantial BTC sell-offs from Mt. Gox creditors and the German government.

However, Bitcoin managed to rebound over the weekend, climbing back above $58,000. Bitfinex analysts interpreted weekend data as indicating a potential stabilization point for Bitcoin, despite Mt. Gox still needing to distribute a significant portion of its Bitcoin holdings to creditors.

Three key factors were highlighted by analysts as potential catalysts for a Bitcoin recovery in the near term; the Short-Term Holder Profit Ratio (SOPR), perpetual futures funding rates and gap between implied and historical volatility.

SOPR dropped to 0.97 by July 6, suggesting that short-term investors were selling at a loss, potentially exhausting their selling pressure.

Bitcoin perpetual futures saw negative funding rates for the first time since May 1, indicating a stabilization or nearing a market bottom.

Lastly, analysts pointed to a narrowing gap between implied and historical volatilities, suggesting increased market stability and potentially preventing further significant price declines.

Despite these optimistic signals, Bitcoin’s recovery was hampered by recent negative developments, including concerns over capitulating miners, Bitcoin transfers in Germany, Mt. Gox issues, and cautious Federal Reserve comments on interest rate adjustments.