In a report disseminated by asset manager ARK Invest on July 18, it was revealed that Bitcoin experienced an oversold condition in June following a substantial sell-off by the German government. This divestment involved 50,000 BTC, confiscated during a 2020 police operation targeting Movie2k, an illicit streaming service.

The market reaction was swift and severe. Bitcoin, which had soared beyond $70,000 in early June, plummeted to a nadir below $55,000 during a transient decline in July.

“Analyzing short-term holder realized profits/losses and miner outflows, Bitcoin appears markedly oversold,” the report noted, with its analysis encompassing data through June 30 and incorporating recent trends. “Current miner outflow levels indicate capitulation, often a precursor to a bullish reversal.”

Despite this tumultuous period, investor interest in Bitcoin exchange-traded funds (ETFs) remained robust, signaling bullish market sentiment. The report highlighted that the precipitous drop in Bitcoin’s price did not precipitate a mass exodus from spot BTC ETFs. As of June 30, the price drop overshot the 30-day percent change in BTC ETF flows by 17.3%.

July witnessed substantial net inflows into BTC ETFs, with approximately $1.35 billion injected into these funds by the week ending July 15, according to CoinShares. Notably, BlackRock’s iShares Bitcoin Trust (IBIT) attracted $107 million on July 18, marking nine consecutive days of inflows, as reported by Thomas Fahrer, co-founder of the crypto data platform Apollo.

However, the future trajectory of Bitcoin prices remains susceptible to global economic variables. ARK’s report emphasized that diminishing corporate profits, indicative of waning pricing power, reflect broader economic frailty, posing a risk to Bitcoin’s sustained performance.

Additionally, Bitcoin faces potential market turbulence from the impending repayment of approximately $9 billion in BTC to creditors of the defunct cryptocurrency exchange Mt. Gox. Nevertheless, industry analysts suggest that creditors might choose to retain their BTC holdings, potentially mitigating adverse impacts on the market, in contrast to the abrupt German sell-off.