Bitcoin Drops 22 in One Month Unveiling the Truth Behind the BTC Plunge Market Calls for Bottoming Out

CoinWorld reports:
Bitcoin has fallen for the fourth consecutive trading day, reaching its lowest point since February. Current market concerns include potential government sales, creditors of a failed exchange, and distressed cryptocurrency miners.
The market shows BTC breaking through $56,500, currently trading at $56,456.52, down 2.48%.


Despite stock market gains, most cryptocurrencies are declining, highlighting a series of challenges facing the industry. Bitcoin is currently down approximately 25% from its March peak, as enthusiasm from ETF investments on U.S. exchanges gives way to concerns over long-term high rates and political uncertainty.
A perfect storm of negative factors has led to Bitcoin’s recent price plunge. The main culprit appears to be Mt. Gox, the bankrupt cryptocurrency exchange, beginning creditor payments. This large-scale Bitcoin liquidation has sparked investor panic, resulting in a wave of selling that pushed prices towards yearly lows.
Administrators of the failed Mt. Gox exchange are gradually returning $800 million worth of Bitcoin to creditors. Uncertainty over how much Bitcoin will ultimately be sold has already affected the market, with Arkham Intelligence reporting a $2.7 billion token transfer related to Mt. Gox last Friday.
There are also indications that German authorities are preparing to sell 50,000 seized Bitcoins obtained earlier from online criminals. Bitcoin miners are under pressure, forced to sell tokens to cope with disappearing profits.
MSCI Inc.’s global stock market index is nearing historic highs, while short-term 30-day correlations between Bitcoin and the index are declining. The question remains whether cryptocurrency’s risk aversion is merely isolated or, after a strong first half performance in the stock market, signals a cautious quarter for mainstream investments.
“The current cryptocurrency market lacks attention,” said Stefan von Haenisch, Head of Trading at OSL SG Pte. “Most of the news circulating now, such as Mt. Gox’s sale, is rather pessimistic.”
Von Haenisch noted that cryptocurrencies require a more dovish view from the Federal Reserve on monetary policy, adding, “One to two rate cuts, coupled with the expansion of the Fed’s balance sheet, are the two key factors cryptocurrencies are really waiting for.”
Willy Chuang, COO of crypto exchange WOO X, indicated that selling pressure is primarily concentrated in the short term. While internal dynamics within cryptocurrencies drive current negative sentiment, today’s eagerly awaited U.S. nonfarm payroll data should not be overlooked. “Note that despite these concerns, long-term impacts may not be severe as the market gradually absorbs selling pressure,” Chuang said. “Short-term market fears are expected, but in the long run, these negative factors may gradually dissipate.”
Reports show a slowdown in U.S. June job growth, with revisions to previous months’ data enhancing the likelihood of the Fed beginning rate cuts in the coming months.
Reduced rate cut forecasts by the Fed, along with high operational costs faced by Bitcoin miners post-halving, are additional factors contributing to overall downward pressure. Moreover, historical trends suggest Bitcoin may be undergoing a seasonal selling period.
Bitcoin peaked at $73,798 in March, buoyed unexpectedly by strong demand for the token’s first U.S. ETF. Subsequent fund inflows decreased, driving Bitcoin’s decline and casting a shadow over other digital asset markets.
Approval for the second-largest token Ethereum’s U.S. ETF is pending, but interest in these products could be mixed if cryptocurrency selling persists.
Coinglass data indicates over $536 million in bullish cryptocurrency positions were liquidated in the past 24 hours, one of the highest since April over the past three days.
“Weekend liquidity shortages will exacerbate any actions triggered by liquidations, even minor ones,” said Caroline Mauron, Co-Founder of digital asset derivatives liquidity provider Orbit Markets. She added that U.S. investors returning from the July 4th holiday should bring some stability.
Additionally, sales by the U.S. government and entities potentially associated with the German government intensify bearish sentiment, further depressing prices, especially considering the U.S. market closure during critical support breakthroughs.
With Bitcoin trading near its annual low, all eyes are on today’s reopening of the U.S. market and institutional investors’ response. Demand for Bitcoin ETFs has been rising recently, and their behavior may determine the cryptocurrency’s future direction.
Ongoing Mt. Gox payments increase the likelihood of continued price declines as investors anticipate further selling. ETF sales driven by bearish market views could exacerbate the situation.
Despite current negative sentiment, Bitcoin still has potential for a recovery wave once selling finds balance. This could depend on positive developments and technical indicators confirming potential recovery.
However, positive U.S. job data and a slowdown in Mt. Gox’s BTC transfers may boost market sentiment. For recovery, Bitcoin needs to close the week above $57,300. Additionally, monitoring the sharp decline in current RSI for signs of slowdown and reversal may indicate potential recovery.
If Bitcoin fails to hold the $53,500 support level, the market may see it drop below $50,000.