CoinDesk Report:
Amid a severe market downturn, the price of Bitcoin has dropped below the $57,000 mark, hitting a low of $56,950 during early European trading on Thursday.
This price point marks its lowest since early May, falling below the critical 200-day moving average of $58,492.
The world’s largest cryptocurrency by market value has now seen a third consecutive day of declines, sparking concerns among investors and analysts alike.
Market experts attribute the sudden drop in price to several factors.
One notable development is Germany’s government transferring approximately 1,300 bitcoins worth $75.53 million to major cryptocurrency exchanges Bitstamp, Coinbase, and Kraken.
According to blockchain analytics firm Arkham, this transaction signifies the largest move to centralized exchanges in recent years, potentially increasing selling pressure.
Uncertainty in the market has also been amplified by the anticipated commencement of Mt. Gox repayments in early July. Arkham Intelligence data shows minor Bitcoin transfers from wallets associated with Mt. Gox earlier today, marking their first activity in a week.
Some bitcoins were sent to wallets confirmed by Arkham as belonging to Bitbank, one of the exchanges selected to manage repayments to Mt. Gox creditors. Arkham Intelligence details that these transactions involve three wallets linked to the defunct exchange, with the largest transfer amounting to approximately 24 bitcoins.
This is believed to be a test transaction in preparation for a large-scale client repayment scheduled for this month.
The long-awaited distribution will return over $9.4 billion worth of bitcoins to approximately 127,000 creditors who have been waiting for repayment for over a decade.
The influx of such a large quantity of bitcoins into circulation may further pressure the market downward.
The price decline has also triggered a wave of liquidations in the derivatives market.
According to CoinGlass data, Bitcoin liquidations have surpassed $100.4 million, with over $86 million worth of leveraged long positions being forcibly closed.
According to 10x Research, $60,000 is a crucial level for Bitcoin miners and buyers of Bitcoin spot ETFs, roughly marking the bottom of a three-month trading range.
“It’s only uninformed traders who would consider buying here. Breaking this support could lead to a steep drop to lows of $50,000,” the report said.
“Unfortunately, many bitcoins still seem overvalued, and adjusting to $50,000-$55,000 could offer a better re-entry point,” it added.
An analyst from Bitfinex told Decrypt that Bitcoin has decoupled from the US stock market, and long-term holders of Bitcoin—who paused any selling in early May—have returned.
“Meanwhile, oversupply continues to weigh on the market, with Mt. Gox depositors and the German Federal Criminal Police potentially selling off, tempted to cash in on recent windfalls of Bitcoin,” analysts said.
Edited by Stacy Elliott.