Could Mt Gox refunds lead to Bitcoin dropping below 50000
Subsequent to briefly surpassing the $71,000 mark in early June, Bitcoin (BTC) has now ventured into its most significant downturn of 2024. Initially, the cryptocurrency lost its relatively steady, multi-month plateau around $67,000, followed by a collapse through multiple successive support levels. As of July 5, the price of Bitcoin had plummeted to $54,413 – marking its lowest point since late February.
While there are numerous potential reasons for BTC’s decline, investors have increasingly focused on a convergence of events that pose a risk of substantial selling pressure. Over the past weeks, the German government has been transferring the roughly 50,000 Bitcoins it had seized at the beginning of 2024 to cryptocurrency exchanges, while cryptocurrencies in U.S. custody have also been in motion.
In the early hours of July 5, Mt. Gox, a Bitcoin exchange that declared bankruptcy a decade ago, made an announcement that it would commence reimbursing its creditors – a development that had been anticipated since May.
The extensive movements – totaling nearly 100,000 BTC when considering the German and Mt. Gox cryptocurrencies collectively – have unsettled investors. However, it is plausible, if not more probable, that the apprehension of a substantial sell-off triggered the ongoing downturn in the crypto market.
Nonetheless, the market turmoil, which witnessed a loss of approximately $130 billion on July 4 and an additional $100 billion within a mere 60 minutes on July 5, might be exacerbated by the potential influx of BTC from Mt. Gox’s creditors should they opt to sell promptly.
Although notable corrections are commonplace in the cryptocurrency markets, the current downturn could be exceptionally perilous. Bitcoin has already descended below several pivotal support levels, embarking on an apparent freefall that could see the coin plummet to, or below, $50,000.
In recent times, Bitcoin had been consistently rebounding off the $65,000 level. Even during the drop in May, when the leading cryptocurrency briefly slipped below $57,000, it swiftly recovered. The crucial support zones were also prominently evident during the ongoing descent, with Bitcoin initially stabilizing around $61,000 and then holding ground above $57,000 for several hours on July 4.
Disclaimer: The information provided on this platform should not be construed as investment advice. Investing carries inherent speculatory risks, and capital is always susceptible to potential losses.
