The Reason Behind the Bitcoin Price Crash
Since the beginning of June, investors have been closely monitoring Bitcoin (BTC), the leading cryptocurrency, with growing caution. Despite hopes that positive developments in 2024, such as the approval of BTC exchange-traded funds (ETFs), would drive the price of the coin towards $100,000 or even $300,000 as predicted by experts, the actual movements in the crypto market have been quite different. Over the past 30 days, BTC has been on a downward trend, falling as much as 11.23%. The current price of Bitcoin is $61,437, significantly below its average price range of $65,000 to $67,000.
It is challenging to determine the exact source of the selling pressure that caused BTC to drop from just below $67,000 to slightly above $61,000. However, several recent events are likely to have contributed to traders’ willingness to sell, resulting in approximately $100 billion in losses during this period.
One event that raised concerns among investors was the German government’s decision to deposit a large amount of BTC seized in January onto various cryptocurrency exchanges, including Coinbase, Kraken, and Bitstamp. The potential sale of up to 50,000 Bitcoins by the Central European country could have significant price implications. However, past government sales of substantial BTC quantities, such as the United States’ sale of 50,000 Bitcoins seized from the Silk Road dark web network, have not led to major price drops.
Nevertheless, fears have been exacerbated by the news in May that the bankrupt cryptocurrency exchange Mt. Gox is preparing to redistribute assets to its creditors, with payments expected to begin in July. Considering that this includes around $9 billion worth of Bitcoin, there is a risk of substantial selling pressure and a high likelihood that these fears will indeed result in actual selling pressure.
In addition to these significant moves resulting from unusual BTC whale activity, the low trading volume observed at the start of June may have amplified the impact of these sales on the price. Furthermore, the findings of technical analysis conducted by prominent cryptocurrency experts, which suggested an upcoming substantial downtrend, may have further unsettled investors.
Lastly, the optimistic price targets, particularly following the Bitcoin halving, and more recently, the announcement by Standard Chartered about the establishment of a spot BTC and Ethereum trading desk, may have caused traders to lose patience and start taking profits as the value of the leading cryptocurrency remained stagnant near $67,000 for an extended period.
Disclaimer: The content of this article should not be considered as investment advice. Investing in cryptocurrencies carries risks, and capital is at risk.