Markets
Bitcoin Falls Below $55,000 as ‘Significant’ Selling Expected in Coming Months
Bitcoin fell 6% to $54,600 in weekend trading, despite recovering losses from late last week.
The world’s largest cryptocurrency by market cap fell to a low of $54,000 on Friday, Decrypt data watch. The asset is currently trading at $55,300.
Several headwinds for Bitcoin Issues persist, including cryptocurrency market uncertainty, potential selling pressure from the German government, and the 127,000 creditors waiting for crypto funds from the Mt. Gox bankruptcy.
A brief rally in prices attempted to regain traction above $58,000 on Sunday before giving up gains to trade at its lowest point since late February.
Germany holds 39,826 BTC worth an estimated $2.2 billion at current prices, report says Arkham Intelligence dashboard.
Meanwhile, users of the former Japanese exchange Mt. Gox are waiting to receive up to $7.7 billion in funds they lost to a hack more than 10 years ago.
Mt. Gox’s payouts are expected to begin this month after preparations are made to distribute the funds. The defunct exchange plans to pay out approximately 142,000 BTC and 143,000 Bitcoin Cash.
“While it is not yet clear how much of the total distribution will be sold into the market, significant selling pressure will be added to Bitcoin,” K33 Research said of Mt. Gox creditors in its statement. latest report.
Summer typically brings a lull in cryptocurrency markets, but with oversupply and downward momentum, traders could face a busier period than expected if more supply floods thinly traded order books, K33 added.
Liquidations in the cryptocurrency market show that long positions were wiped out to the tune of $175 million, according to CoinGlass Short positions worth an additional $35 million were also cleared, representing approximately $210 million.
This follows the extensive sell-off on Thursday and Friday, which saw $600 million in liquidation after Bitcoin briefly fell below $55,000.
Broader markets are being impacted by a liquidity crunch in Q2 2024, Web3-focused venture capital firm Ryze Labs told Decrypt.
The Federal Reserve’s reverse repo balance jumped more than $200 billion last week to $664.5 billion, suggesting a significant liquidity outflow, she said.
China’s reduction in liquidity injections since February 2024 could also tighten global liquidity, potentially affecting cryptocurrency prices and increasing volatility, Ryze Labs said.