Bitcoin Price Drop Is the Crypto Market Crash Likely to Send it Below 50K
Following a sustained period above $60,000, Bitcoin recently slipped below $58,000, marking a decline of more than 3.8% over the past day. This drop has attracted considerable attention from analysts and investors alike. Here’s an in-depth look at the current situation and what the future might hold for Bitcoin.
Current Bitcoin Price Dynamics
Bitcoin fell below $58,000 early on Thursday, hitting its lowest point in two months. This decline comes during a phase of unusually low volatility, with Bitcoin prices previously oscillating between $60,000 and $70,000. The market sentiment has turned cautious amidst rising concerns about supply and growing bearish expectations. Trading volumes have surged 55% within 24 hours, suggesting increased volatility and a greater likelihood of further declines rather than a reversal, as indicated by the 200-day Exponential Moving Average (EMA).
Despite this recent downturn, Glassnode’s analysis indicates that periods of low volatility often precede significant price movements.
Key Factors Behind the Recent Price Decline
Crypto analyst Wise Advice has highlighted several factors contributing to Bitcoin’s recent price drop.
Mt. Gox Token Distribution
A significant factor influencing the decline is the upcoming distribution of approximately $9 billion worth of Bitcoin by the defunct Mt. Gox exchange. Creditors are set to receive around 140,000 Bitcoins in July, raising concerns that these recipients might sell off a substantial portion of their holdings. Given Bitcoin’s price was around $600 when Mt. Gox collapsed, these creditors stand to profit considerably, potentially adding selling pressure to the market.
Miners Selling Bitcoin
Another contributing factor is the sale of Bitcoin holdings by miners. Since Monday, miners have sold more than $150 million worth of Bitcoin on exchanges. This selling pressure has intensified following the Bitcoin halving event, which reduced daily miner revenues from $79 million to $29 million, necessitating asset liquidation to sustain operations.
Increased Liquidations
Approximately $231.9 million worth of long positions were liquidated in the past 24 hours, further exacerbating the downward pressure on Bitcoin’s price and creating a cycle of declining prices and increased liquidations.
Buy-the-Dip Opportunity?
With the surge in supply and escalating long liquidations, there is speculation about whether Bitcoin’s bearish trend will drive prices below the $56,000 mark to test the psychological threshold of $50,000. On-chain data provider Santiment has observed significant sell-offs in both Bitcoin and alternative cryptocurrencies, pushing prices to nearly two-month lows. Despite the impending launch of spot Ethereum ETFs by mid-July, Ethereum prices have also dropped below $3,200.
Santiment suggests that current market conditions may present a buying opportunity for those willing to weather initial enthusiasm and wait for traders to become skeptical and impatient before re-entering the market.
The future trajectory of Bitcoin remains uncertain amidst these developments. Will it stabilize around $56,000 or slide towards $50,000? Share your insights.
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