Analyst Warns Bitcoin’s Drop Below $58,000 May Signal Larger Correction Ahead
Bitcoin experienced a significant drop on Thursday, falling below $58,000, marking its lowest point since May. The downward trend has pushed bitcoin under its 200-day moving average, a potential indicator of a market downturn, as highlighted by FXPro’s Alex Kuptsikevich.
Investors have been offloading the cryptocurrency amid growing concerns about selling pressure stemming from Mt. Gox. This development has caused bitcoin to dip below its 200-day moving average, a key metric used to predict market direction, with sustained trading below this average typically pointing towards a downward trend.
Kuptsikevich noted a potential 12% decline to $51.5k or an equivalent growth to $65.8k based on bitcoin’s 50-day moving average. The recent 8.6% drop in bitcoin’s value within the first three days of the month has been attributed to apprehensions regarding payouts from Mt. Gox, a crypto exchange that faced bankruptcy nearly a decade ago.
The planned reimbursements, intended for clients affected by a 2014 hack, will be distributed in bitcoin or bitcoin cash. However, the possibility of clients converting their tokens into profits has heightened concerns about increased selling pressure in the market. This mounting unease has been reflected in bitcoin’s recent price performance, according to K33 research.
The decline in bitcoin’s value has also had a ripple effect on other cryptocurrencies like ether and solana, with the overall industry market capitalization dropping below $2.17 trillion, hitting a low not seen since February.
Despite the current market challenges, some analysts remain optimistic about bitcoin’s future. Fundstrat’s Tom Lee predicted a surge to $150,000 by year-end once the Mt. Gox-related uncertainties dissipate. However, Galaxy CEO Michael Novogratz had previously warned of an impending correction in bitcoin’s value before any substantial upward movement, suggesting a price floor of $50,000.
Although facing recent setbacks, bitcoin has shown resilience this year, with a year-to-date increase of over 38%. The cryptocurrency had surged to a record high of $73,798 following a significant bull run triggered by the introduction of bitcoin spot ETFs in January.
