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Cryptocurrency Market Down, Risk Remains High | Technology | Business
TThe cryptocurrency sector has shown signs of turbulence, given the data on Bitcoin sales in Germany and concerns about significant liquidations by creditors of the defunct Mt. Gox exchange.
Yet beyond these oversupplies lies a promising future, driven by continued risk-taking in established markets and favorable macroeconomic circumstances.
During times of global economic expansion, investors tend to be more willing to put money into riskier, growth-sensitive assets, such as Bitcoin and stocks.
U.S.-based spot Bitcoin exchange-traded funds (ETFs) have seen their biggest day of net inflows in more than a month as the cryptocurrency market tumbles. The 11 funds generated $295 million in revenue on July 8.
For the first time in the previous three trading weeks, net inflows for all funds were positive on this day. BlackRock’s iShares Bitcoin Trust ETF saw the largest daily inflow of $187.2 million. Fidelity’s Wise Origin Bitcoin Fund, which had gains of $61.5 million, came in second.
Meanwhile, Grayscale Bitcoin Trust has seen $25.1 million in inflows on a rare day of strong market activity. Today is the biggest inflow day since June 5, when ETFs received more than $488 million in fresh capital.
The German government has so far sent over 26,200 BTC to exchanges and market makers. Arkham Intelligence data indicates that, at the time of writing, it still has 27,460 BTC, or $1.6 billion, in reserve.
Bitcoin has fallen nearly 17% to $57,200 in a month, triggering a chain reaction in meme coins, digital assets allegedly linked to artificial intelligence (AI), and other volatile areas of the cryptocurrency market. The German government currently owns $1.57 billion worth of Bitcoin.
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Meanwhile, as the defunct Japanese cryptocurrency exchange Mt. Gox begins paying out creditors who lost money in a 2014 breach, concerns are growing that $8.5 billion in Bitcoin could enter the market in the coming months. However, some analysts say concerns about Mt. Gox’s Bitcoin sales may be overblown.
Over the past two weeks of trading, the price of Bitcoin has plummeted; on July 5, it fell as low as $53,600, marking the first time since February that the commodity had fallen below $54,000.
The overall view is even more pessimistic, with the possibility of another decline before consolidation for a few months and then another recovery in the fourth quarter.
At the time of writing, Bitcoin has bounced to $57,200 from a low of $54,300 during the Asian trading session on Monday morning.
On the downside, there is support at $51,500, but an upside move would need to clear the resistance levels at $60,000.
In addition, the release of US inflation data could exacerbate the already volatile situation in cryptocurrency markets.
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