Bitcoin declines sharply as concerns over potential sales of tokens by creditors of the bankrupt Mt. Gox exchange mount.
According to Bloomberg, the largest digital asset plummeted by as much as 5.2% on Monday, sliding to $54,313, which is greatly below its peak of $73,000 in March. Meanwhile, smaller cryptocurrencies like Solana and Cardano saw gains during the same period.
Mt. Gox, which collapsed ten years ago following a massive hack, is gradually returning approximately $8-9 billion worth of Bitcoin to creditors, raising fears of a potential influx of supply into the market.
Market analysts noted that crypto market makers have not intervened to stabilize prices amidst volatile trading conditions.
Why is Bitcoin Declining Now?
To be clear, the distribution of Bitcoin by Mt. Gox creditors is not anticipated to trigger mass sell-offs, but experts caution that prolonged trading below $60,000 could heighten the likelihood of additional price corrections.
Unfortunately, the current market sentiment for BItcoin has soured due to reports of the German government selling seized Bitcoin, according to CNBC, which increases market supply and can drive prices down, and a decline in investments into US exchange-traded funds dedicated to cryptocurrencies.
This, alongside Mt. Gox's repayment, has led to skepticism among some enthusiasts about Bitcoin's potential to reach the $100,000 mark.
For now, technical analysts closely monitor Bitcoin's performance, with speculators eyeing key indicators such as the 200-day moving average to gauge whether recent price drops signify a bottoming-out phase or prolonged downturn.
The recent dip in Bitcoin's price can also be related to market sentiment. Some investors are viewing this decline as temporary, anticipating potential policy shifts by the Federal Reserve that could boost the market.
Political developments, particularly Donald Trump's pro-crypto stance as he campaigns for the US presidential election, contribute to these investors' optimism.
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