Bitcoin Hits Four-Month Low: Understanding the Crypto Market Decline Amid Market High
The price of Bitcoin took a hit early on July 5, dropping over 8 percent to $53,523. Traders observed that this fall was below the $55,000 chart support level, marking its lowest price in four months since February 2024, as reported by Reuters. Despite positive signals from world markets, the world’s largest cryptocurrency by market cap saw a decline in its 12 percent weekly gains.
In addition to Bitcoin, Ether also experienced a 9 percent drop, reaching a two-month low. Other smaller cryptocurrencies like Cardano and XRP faced losses exceeding 10 percent, according to Bloomberg. Traders were concerned about the potential impact of long-dormant tokens from Mt. Gox, a now-defunct Japanese crypto exchange. Reports suggested that the return of Bitcoin to creditors and selling pressure from leverage players contributed to the market turmoil.
Mt. Gox’s collapse in 2014 raised fears that the gradual release of $8 billion worth of tokens could lead to more selling. A report by Bloomberg highlighted that a Mt. Gox-associated wallet moved $2.7 billion worth of tokens on July 5. Analysts like Tony Sycamore from IG noted that the selling pressure stemmed from creditor actions related to the failed Mt. Gox exchange.
Uncertainty looms over the possibility of Democrats replacing Joe Biden with a less crypto-friendly presidential nominee, adding to market concerns. The initial boost from US-based Bitcoin exchange-traded funds (ETFs) appears to have subsided. Bitcoin, which reached a record high of $73,803.25 in March on the back of Bitcoin ETF, has seen its momentum wane.
Stefan von Haenisch, head of trading at OSL SG Pte, suggested that the crypto market awaits more accommodative monetary policy signals from the Federal Reserve. He highlighted that rate cuts and balance sheet expansion by the Fed are crucial factors the crypto market is anticipating. Investors are also keeping an eye on job data to assess the potential moves by the Federal Reserve.
The recent market trends and uncertainties surrounding key factors like Mt. Gox tokens, political developments, and monetary policy signals indicate a volatile period for cryptocurrencies. Inputs from Reuters and Bloomberg have provided insights into the evolving dynamics of the crypto market.
