Bitcoin reaches its lowest point in four months
Why is the crypto market experiencing a decline despite the overall market being at a high point? On July 5, Bitcoin experienced a significant drop of over 8 percent, reaching a price of $53,523. Traders observed that this was below the chart support level of $55,000 and marked the lowest price in four months, dating back to February 2024, according to Reuters.
In addition, the largest cryptocurrency in terms of market cap experienced a slight decline in its 12 percent weekly gains, despite positive signals from global markets.
In addition to Bitcoin, Ether experienced a 9 percent decline, reaching a two-month low for the cryptocurrency. Smaller coins like Cardano and XRP also experienced losses of over 10 percent, according to Bloomberg.
Traders were expecting the release of long-lost tokens from Mt. Gox, a defunct Japanese crypto exchange. According to media reports, these tokens were supposed to be returned to creditors, causing further selling from leverage players and creating a sense of unease in the market, as reported by Reuters.
In 2014, Mt. Gox experienced a collapse. There are concerns that the gradual release of $8 billion worth of tokens could potentially lead to increased selling. According to a Bloomberg report, on July 5, a wallet associated with Mt. Gox transferred tokens worth $2.7 billion, as reported by Arkham Intelligence.
The selling pressure is still attributed to creditor selling from the failed Mt Gox exchange. However, the acceleration to the downside suggests the market is trying to get ahead of the creditor flows,” Tony Sycamore, a market analyst at IG, told Reuters.
There is also uncertainty surrounding the possibility of the Democrats selecting a presidential nominee who may not be as supportive of cryptocurrencies. The Reuters report noted that the initial surge from US-based Bitcoin exchange-traded funds (ETFs) appears to have diminished. In March, Bitcoin reached an all-time high of $73,803.25, driven by the Bitcoin ETF.
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On a likely up chance, Stefan von Haenisch, head of trading at OSL SG Pte, told Bloomberg that the crypto market needs “more dovish notes on monetary policy from the Federal Reserve” and that “one to two rate cuts, coupled with Fed balance sheet expansion, are two key ingredients that crypto is really waiting for.”
The Bloomberg report also noted that investors are awaiting job data to gauge the Fed’s likely move.
The world’s largest cryptocurrency has been under pressure in recent months after the first debate between U.S. presidential candidates Joe Biden and Donald Trump raised concerns about Biden being replaced as a candidate.
“BTC crashed to a new three month low of under 58k USD before a mini recovery back to just under 60k USD. While the local low of BTC stands at 56.7k USD, anything lower would take us to a 5 month low in BTC prices. If not recovered again, 60k USD may now become a resistance,” said CoinSwitch Markets Desk.
Bitcoin experienced a strong start to the year following the launch of exchange-traded funds in the U.S., reaching a record high of $73,803.25 in mid-March as investors flocked to it. However, the rally has since fizzled, with Bitcoin losing over 21% from its peak.
Analysts attribute this decline to a politically charged environment, with ongoing elections in France and Britain prompting some risk reduction, along with shifting dynamics in the U.S. election campaign.
Additionally, reports that Mt. Gox, once the world’s leading cryptocurrency exchange before its collapse in 2014, is repaying its creditors, may be contributing to Bitcoin’s decline if those creditors are selling off their tokens.
However, Sycamore noted that although this marked a period of consolidation for the cryptocurrency following substantial gains earlier this year, there was potential for it to retest the March highs and potentially rise towards $80,000.
“On the other hand, asset management firm Bitwise has amended its S-1 registration with the US SEC expected to give the final approvals on the ETH ETF as early as July. However this news could not stop ETH to bleed as it fell by more than 3% yesterday,” Coinswitch further added.
