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Bitcoin price climbs nearly 6% after falling to lowest level since February
Bitcoin’s price rebounded today after falling to a four-month low. (Photo by Chesnot/Getty Images)
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Bitcoin prices rebounded today, climbing after falling to their lowest level in more than four months amid market weakness.
The world’s most valuable digital currency hit $56,856.61 this afternoon, according to CoinMarketCap Data.
At that point, the cryptocurrency was up more than 5.8% after falling to $53,717.34, its lowest value since late February, shortly after midnight EST, additional figures from CoinMarketCap show.
After hitting the aforementioned daily high above $56,800, the digital asset saw some volatility but held onto most of the gains it generated earlier in the day.
When explaining the recent fluctuations in bitcoin’s price, several analysts said the digital currency had become oversold as it declined over the past 24 hours.
Several media reports have highlighted the announcement that Mt. Gox’s trustee had begun making payments to some creditors as the reason the digital currency fell to its lowest level in more than four months in the past 24 hours.
Tim Enneking, Managing Partner of Psalmcommented on the development, but noted that several factors contributed to bitcoin’s losses.
“In a market that was already relatively weak due to post-ATH consolidation, the usual summer doldrums, and the SEC revealing the actual launch date of ETH ETF spot trading, concerns about Mt. Gox BTC recipients being dumped (whether well-founded or not) were clearly the proverbial straw that broke the camel’s back and sent BTC spot prices plummeting from $60,000 to almost $53,000,” he said via emailed comments.
Independent cryptocurrency analyst Armando Aguilar also pointed out that several variables contributed to the decline in digital currency markets.
“As new supply hit the market from Mt. Gox Trustee, it showed BTC transfers to unknown addresses, and the German government was also preparing to dump additional supply. A low index of fear and greed spooked the market, all of which caused prices to fall across the board,” he said in emailed comments.
Once prices fell, bitcoin became oversold, causing the digital currency to rally, Aguilar added.
Julio Moreno, head of research for CryptoQuantalso intervened, offering a different perspective on the situation.
“Prices fell mainly due to selling/profit taking by large investors (whales) and mid-sized miners,” he said via Telegram.
“Sales by Mt. Gox and other entities (German government) are relatively small compared to overall Bitcoin funds,” Moreno added.
“Several on-chain indicators signaled an oversold zone after prices hit $53,000, which could explain their strong rebound. For example, traders’ unrealized profits reached negative levels not seen since the FTX collapse.”
He included the chart below, which leverages data from CryptoQuant, to illustrate these developments:
Bitcoin On-Chain Trader Realized Price and Profit-Loss Margin
CryptoQuant
Moreno also pointed out that the amount of money seized by the U.S. and German governments represents a very small fraction (about 1.6%) of the total realized value of bitcoin.
The difference can be visualized using the graph below:
Bitcoin’s Realized Cap Compared to Bitcoin Value Seized by US and German Governments
CryptoQuant
Going forward, the Mt. Gox sales may not be as big of a headwind for cryptocurrency markets as some might think, said Enneking, who noted that investors who get their bitcoins back likely won’t sell them right away.
“Unless one assumes that all Mt. Gox BTC recipients are idiots,” “they won’t all abruptly dump their long-awaited BTC upon receipt – and since they’ve already waited 10 years, what’s another few months for the price to recover?” he said.
“So at some level BTC is clearly oversold and apparently the market thinks that level is in the mid to high 50s,” Enneking said.
“Either way, once BTC is actually distributed and the sky miraculously doesn’t fall, BTC will enjoy an immediate and very healthy rebound!” he predicted.
Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, EOS, and SOL.