Why did Bitcoin suddenly experience a major drop causing over 80000 people in the virtual currency market to face liquidation

CoinW reported:
Today, Bitcoin once again plunged by more than 5%, falling below the $55,000 mark.
According to data from Coinglass, as of press time, Bitcoin is now trading at $54,887 per coin, with a 5.71% decrease in the past 24 hours.
The sharp drop in the price of Bitcoin has led to a widespread slump in the cryptocurrency market, with the top 10 cryptocurrencies by market value experiencing declines ranging from 6% to 9%.


Image Source: Coinglass screenshot
Affected by the significant fluctuations, over 80,000 people have been liquidated in the past 24 hours, with liquidation amounts exceeding $200 million.


Image Source: Coinglass screenshot
Since Bitcoin hit a historical high of $73,798 per coin in March this year, it has plunged below $60,000 per coin in succession, rebounded to $71,000 per coin in June, and then sharply dropped again at the end of June, with a decline of over 23% in nearly a month.
According to Securities Times, there are two main reasons for the recent consecutive declines in Bitcoin. One is that on July 4, the German Federal Criminal Police Office transferred around $75 million worth of Bitcoin to exchanges such as Coinbase, Kraken, and Bitstamp.
Since mid-June, the German government has sold over $390 million worth of Bitcoin in less than a month. These Bitcoins were nearly 50,000 coins seized by the German Federal Criminal Police Office in 2013. At today’s prices, these Bitcoins are estimated to be worth about $2.7 billion.
Secondly, the Mt.Gox trustee recently announced that the repayment of Bitcoin (BTC) and Bitcoin Cash (BCH) will begin in early July 2024. Data shows that as of the end of June, the Mt.Gox trustee holds about 140,000 Bitcoins, worth approximately $9.26 billion.
Mt.Gox was once the world’s largest Bitcoin exchange, holding a 70% market share at its peak. On February 7, 2014, Mt.Gox suddenly announced the suspension of all Bitcoin withdrawals. Subsequently, an internal company document revealed that hackers attacked Mt.Gox, stealing 744,000 customer Bitcoins and another 100,000 Bitcoins owned by the company, totaling 850,000 Bitcoins, valued at about $450 million at the time. Following this incident, the cryptocurrency market faced a crisis of trust, and the price of Bitcoin once fell by over 60%.
It wasn’t until 2019 that Mt.Gox recovered 141,000 Bitcoins, which the court ruled to be delivered to the trust. Currently, Mt.Gox has announced the repayment to customers from 10 years ago, and the market is concerned that this may lead to a large amount of Bitcoin being sold, putting pressure on the market.
Although Bitcoin has been under pressure and experiencing continuous declines recently, institutions are still optimistic about the future prospects of Bitcoin. The “2024 Second Half Outlook Report” released by the digital asset data company CCData recently believes that Bitcoin has not yet reached the top of the current appreciation cycle and may reach new historical highs this year.
Daily Economic News compiled from Securities Times and public information
Disclaimer: The content and data of this article are for reference only and do not constitute investment advice. Please verify before use. The operation based on this carries its own risks.