After staying above $60,000 for a long time, Bitcoin recently fell below $58,000, marking a drop of over 3.8% in the past 24 hours.
This decline has drawn significant attention from analysts and investors. Here’s a breakdown of the current situation and what might be in store for Bitcoin moving forward.
Bitcoin Hits Two-Month Low Amid Low Volatility
Bitcoin’s price dipped below $58,000 early on Thursday, marking a two-month low. This drop occurs during a period of unusually low volatility, with BTC prices having previously fluctuated between $60,000 and $70,000. As fear and supply increase in the crypto market, bearish expectations are rising. With Bitcoin currently at the 200-day EMA, the likelihood of a breakdown seems higher than that of a reversal, especially with trading volume surging by 55% in 24 hours.
Despite this recent dip, Glassnode’s analysis indicates that periods of low volatility are often followed by significant price movements, suggesting that a notable change could be on the horizon for Bitcoin.
Source: X
Factors Behind Bitcoin’s Recent Price Drop
Wise Advice, a crypto analyst, has highlighted several reasons for Bitcoin’s recent freefall. One significant factor is the impending distribution of nearly $9 billion worth of Bitcoin by the defunct Mt. Gox exchange. With around 140,000 Bitcoins set to be distributed to creditors in July, there is concern that these creditors might sell off a large portion of their holdings. Given that the price of Bitcoin was around $600 when Mt. Gox collapsed, these creditors stand to make considerable profits, potentially putting pressure on the BTC market.
Additionally, Bitcoin miners have begun selling their BTC holdings. Since Monday, they have offloaded over $150 million worth of Bitcoin on exchanges. This selling pressure is partly due to a drop in daily miner revenue, which has fallen from $79 million to $29 million following the Bitcoin halving event. To sustain their operations, miners are forced to liquidate their assets.
In the past 24 hours, approximately $231.9 million worth of long positions have been liquidated. This has further intensified the Bitcoin price drop, creating a feedback loop of declining prices and increased liquidations.
Market Conditions and Potential Buy-The-Dip Opportunity
As supply increases, long liquidations are rising, leading to concerns that the bearish trend might push Bitcoin below the $56,000 level and potentially test the psychological $50,000 mark. On-chain data provider Santiment has noted significant sell-offs in both Bitcoin and altcoins, with prices dropping to nearly two-month lows. Despite the expected launch of spot Ethereum ETFs by July 15, Ethereum prices have also fallen below $3,200.
Santiment suggests that the current market conditions could present a buy-the-dip opportunity. They advise waiting for the initial market enthusiasm to wane and for traders to become skeptical and impatient before making new investments.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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