Bitcoin slumps below $59,000 amid market uncertainty
Bitcoin’s (BTC) value dropped below $59,000 on Thursday, trading at $58,827.
Market data shows that Bitcoin has fallen 3.38% in the past day, reaching its lowest point since early May despite expectations of a price recovery. Rachael Lucas, a crypto analyst at Australia’s BTC Markets told The Block:
The fall below the $60,000 resistance line is significant as it marks a psychological barrier for many investors. […] If bitcoin remains below this level, we could see increased volatility in the short term.
The recent price fluctuations are largely attributed to the upcoming payout for Mt. Gox creditors, who are set to receive approximately 142,000 BTC (worth about $9 billion) starting in July. This follows Mt. Gox transferring $840 million worth of Bitcoin in late May. Lucas suggested this substantial repayment could exert “significant selling pressure” on the market.
Adding to the uncertainty are concerns about U.S. inflation and interest rates. Federal Reserve Chair Jerome Powell recently stated that more work is needed to control inflation, despite acknowledging progress. Contrary to investor hopes for multiple reductions, the Fed’s indication of only one potential interest rate cut this year has contributed to a risk-averse market sentiment.
Analysts undecided on Bitcoin’s direction
While some analysts had predicted a July rebound for Bitcoin, citing historical patterns, Bit.com’s Chief Marketing Officer Toya Zhang expressed skepticism. Zhang cited low market liquidity and a lack of new crypto narratives as obstacles to significant growth without interest rate cuts.
Zhang also noted an increase in large sell orders at over-the-counter desks, suggesting that high-net-worth individuals and family offices are taking profits from the previous bull cycle. Recent data shows declining trading volumes for U.S. spot Bitcoin exchange-traded funds (ETFs), with volume dropping to around $800 million on Wednesday.
Lucas concluded by forecasting continued Bitcoin volatility in the coming week as the market processes the Mt. Gox repayments and reacts to broader economic indicators. She added that a rebound might occur if market liquidity remains strong, as has happened following previous significant selloffs.
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