Key Takeaways:
Earlier today, Bitcoin (BTC) plunged to its lowest price in a month after briefly diving below the $59,000 mark before bouncing back above the crucial support level of $60,000. Analysts see the drop as a price correction event to flush out excessive leverage in the market, but warn it isn’t quite done yet.
Mt. Gox’s Creditor Reimbursement and German Government Selling its Holdings Puts Pressure on BTC
The recent loss was exacerbated following news that collapsed Japanese crypto exchange Mt. Gox will return nearly $9 billion worth of BTC to its creditors starting July, and the German government selling hundreds of millions of dollars worth of the apex cryptocurrency.
Mt. Gox ceased all operations and went offline a decade ago after losing 850,000 BTC, worth approximately $52.1 billion in today’s price, to a hack. Months after reportedly the largest exchange hack in history, the team discovered 202,000 BTC ($12.3 billion), which will be used to reimburse customers.
The defunct exchange owes more than $9.4 billion to its 127,000 creditors, who have been waiting for over 10 years to recover lost funds.
Experts say this event could cause significant selling pressure for Bitcoin. Bloomberg’s senior ETF analyst Eric Balchunas wrote on X that it is equivalent to “over half of all the (Bitcoin) ETF inflows being negated in one shot”.
To add more salt to the wound, blockchain analytics firm Arkham Intelligence reported that a wallet linked to the German government moved 6,500 BTC (approximately $400 million) on June 19.
That particular wallet had been holding nearly 50,000 BTC since February, which is worth over $3 billion at today’s market price.
The Last Time Bitcoin’s RSI was this low, It was Trading at $26,000
Pseudonymous crypto trader “Jelle” expects this to be a temporary summer price shakeout and not a deeper correction. In a July 24th X post, the analyst wrote that Bitcoin’s daily Relative Strength Index (RSI) has not been this low in nearly a year and the last time this happened, it was trading at $26,000.
RSI is a momentum indicator used to measure whether an asset is in an oversold or overbought position based on the magnitude of its recent price changes.
Despite the downtrend, speculators have continued to add new long positions that have led to further liquidations. This caused Bitcoin’s price to drop even further to $58,000 the previous day.
Bitcoin Miners are Selling their Stash to Survive in the Expensive and Demanding Sector
Popular crypto analyst Willy Woo highlighted that along with the liquidation squeeze, the effect of post-halving Bitcoin miner capitulation continues to hover around the market, which is putting more pressure on BTC prices.
Bitcoin miners have been selling their holdings in large amounts to finance hardware upgrades to cope with the spiked mining difficulty. This has resulted in small-scale miners liquidating and shutting shops.
Woo believes that technical indicators are pointing towards a Bitcoin price reversal. His prediction came true after the world’s largest cryptocurrency reversed its loss from under $59,000 to climb above $61,500.
$54,000 will be a Key Price Level for Bitcoin as Bulls and Bears Fight to Take Control
However, he did warn that the market is not entirely out of the water as it still needs to figure out how much speculative excess has been flushed out. Without a significant reduction in BTC futures positions the price of Bitcoin won’t move upward sustainably.
Woo believes there is a good chance that Bitcoin can see new lows and pointed out $54,000 as the next key price level to watch where another layer of liquidations would occur. He said dropping to that level will push BTC below the price point of short-term holders, thereby entering its bearish phase.
The $54,000 level will serve as a borderline between the bullish and bearish market, and falling below or climbing above this would be critical to the crypto market considering the current macroeconomic conditions.
At the time of writing, Bitcoin (BTC) is trading at $61,344 – down 2.5% over the last 24 hours.
Read more: Turkish Crypto Exchange BtcTurk Hacked!
