Bitcoin Plummets 30% Compared to Gold, Peter Schiff Issues Warning of Potential Further Decline

Bitcoin (BTC) has recently faced significant volatility in the market. The price of Bitcoin has dropped over 20% from its peak, falling below the crucial $59,000 threshold. Noted economist and vocal Bitcoin critic Peter Schiff has drawn attention to this decline, particularly highlighting the more substantial decrease in Bitcoin’s value when compared to gold.

Schiff pointed out that Bitcoin is down by more than 30% in terms of gold, indicating a more severe bear market scenario in this context. This observation comes at a critical time for Bitcoin, as it grapples with various challenges. Schiff’s recent remarks on X (formerly Twitter) underscore a key concern: the imminent release of Bitcoin holdings from the now-defunct Mt. Gox exchange.

Mt. Gox, which once facilitated over 70% of global Bitcoin transactions, ceased operations in 2014 following a series of damaging hacks and mismanagement, resulting in the loss of hundreds of thousands of Bitcoins. After nearly a decade of legal and financial processes, Mt. Gox has announced the commencement of the reimbursement process.

Starting on July 2, the defunct exchange will begin reimbursing creditors with Bitcoin and Bitcoin Cash (BCH). Many investors are apprehensive that the influx of a substantial amount of BTC into the market could further drive down its price. The fear is that creditors, some of whom have been waiting years to recover their funds, might swiftly sell their Bitcoin upon receipt, potentially oversaturating the market and causing a price decline.

Mike McGlone, Senior Commodity Strategist at Bloomberg, also highlighted Bitcoin’s vulnerability against gold. In a post on X, he mentioned the historical implications of the S&P 500 extending 20% above its 100-week moving average, indicating unfavorable conditions for Bitcoin compared to gold.

Furthermore, the market witnessed a digital asset investment products outflow of $1.2 billion, with Bitcoin accounting for over $630 million of the total outflows, signaling institutional selling primarily driven by investors in the U.S. and Canada.

Bitcoin miners have been selling their holdings to adapt to reduced block rewards following the recent halving event, where rewards decreased from 6.25 BTC to 3.125 BTC. In June alone, miners sold 30,000 BTC valued at around $2 billion. Additionally, the German government liquidated over $3 billion worth of BTC.

The downward trend in Bitcoin’s price has been influenced by broader macroeconomic factors such as rising interest rates and investor fatigue. The breach of the critical support level at $60,000 has raised concerns about a potential drop to $46,600. Technical analysis has also indicated negative trends, including the formation of a double-top pattern around $70,000 and a “death cross” on the daily chart, both suggesting a prolonged downtrend.

Despite these bearish indicators, some analysts see the potential for a rebound. Ali Martinez, a prominent crypto analyst, noted a buy signal on the Bitcoin daily chart from the TD Sequential indicator, hinting at a possible short-term recovery. Additionally, Bitcoin’s Relative Strength Index (RSI) entering oversold territory historically preceded significant price surges.

Martinez’s optimism is supported by past instances where Bitcoin experienced substantial gains after hitting similar RSI levels. If Bitcoin rebounds to $63,700, it could trigger short liquidations worth $57.85 million, potentially driving the price higher. However, the market will witness the expiry of 104,000 BTC options on June 28, with a notional value of $6.72 billion, suggesting a bearish sentiment among investors. Moreover, the Federal Reserve’s PCE inflation data release on Friday could further contribute to market volatility.