Reasons for the Bitcoin Price Crash An Insight
Since the beginning of June, Bitcoin (BTC) has been closely monitored by investors who are becoming increasingly cautious. Despite optimistic predictions that various positive developments in 2024, such as the approval of BTC exchange-traded funds (ETFs), would drive the coin’s price towards $100,000 or even $300,000, the actual movements in the crypto market have been quite different. Over the past 30 days, BTC has experienced a downtrend, falling as much as 11.23%. Currently, Bitcoin’s price stands at $61,437, which is significantly lower than its average price range of $65,000 to $67,000 over several months.
It is challenging to pinpoint the exact source of the selling pressure that caused BTC to drop from just below $67,000 to slightly above $61,000. However, recent events have likely contributed to traders being more inclined to sell, resulting in losses of around $100 billion during this period. One such event was the German government depositing a substantial amount of BTC seized in January to various cryptocurrency exchanges, including Coinbase, Kraken, and Bitstamp. This move raised concerns among investors, considering that Germany possesses approximately 50,000 Bitcoins that could potentially disrupt the market significantly. Nevertheless, previous government sales of large quantities of BTC, such as the United States’ sale of 50,000 Bitcoins seized from the dark web network Silk Road, have shown that law enforcement offloadings do not necessarily lead to price dumps.
However, fears may have been exacerbated by the news in May that the bankrupt cryptocurrency exchange Mt. Gox is preparing to redistribute its assets to creditors, with payments scheduled to begin in July. With approximately $9 billion worth of Bitcoin involved, there is a risk of substantial selling pressure, further fueling existing concerns.
In addition to these major developments, the relatively low trading volume reported at the start of June likely amplified any price changes resulting from the sales. Furthermore, the recent results of technical analysis conducted by prominent cryptocurrency experts, which hinted at an impending downtrend, may have further unsettled investors.
Lastly, the optimistic price targets, particularly following the Bitcoin halving and recent announcements such as Standard Chartered’s establishment of a spot BTC and Ethereum trading desk, may have caused traders to lose patience and start taking profits as the leading cryptocurrency remained stagnant near $67,000 for an extended period.
Disclaimer: The content of this article should not be considered as investment advice. Investing in cryptocurrencies carries inherent risks, and your capital is at risk.
