Bitcoin Crash Resumes: Is It Signaling Weakness?

The cryptocurrency market witnesses a deep correction. A downtrend of more than 11% over 2 days resulted in investors losing $250 billion. In the past 24 hours, the market has fallen by more than 8%, hurting the sector’s recovery and progressing to a bear run.

Bitcoin Prices fell drastically to a four-month low on Monday. It dropped more than 6% before cutting losses to trade at around $55,500 as of 3:15 a.m. Cryptocurrency prices have been plummeting for weeks, with major tokens also experiencing significant drops in value. This alarming trend is driven by widespread uncertainty and panic selling among investors, compounded by creditors of the bankrupt Mt. Gox exchange.

The cryptocurrency market’s decline isn’t solely due to everything happening at Mt. Gox now.

The major sell-offs of the markets are due to the huge amounts of liquidation assets owned by the criminal groups. The German government has been trying to sell hundreds of millions of dollars worth of BTC quickly for fiat currency. Since June, Berlin has been sending its reserves to exchanges such as Coinbase, Bitstamp, and Kraken. This liquidation of assets from criminal groups has raised worries about major sell-offs in the market. According to Arkham Intelligence, Germany reportedly still possesses approximately $2.2 billion worth of Bitcoin.

Why Did Bitcoin Crash Today?

Altcoins such as Ethereum, BNB, Cardano, XRP, and Toncoin decreased by more than 15%. Solana ecosystem tokens, meme coins, and AI coins all saw significant losses in the past 2 days.

The mood of the cryptocurrency market has turned fearful again, with selling by investors this time directed to the Mt. Gox trust fund. The first BTC and BCH payments ($10 billion) will start returning this week. 

JPMorgan and CoinShares are predicting a market crash. They are worried that there will be too much selling of cryptocurrency. This could lead to a rebound by creditors.

Possible Contributing Factors of the Bitcoin Price Crash

Nowadays, the total crypto market as a single entity needs outcomes after the last Bitcoin dive. Experts have identified some main reasons that have lower chances of causing the fall. Here’s how they slice and dice the matter:

A possible cause of the decrease in the Bitcoin price this week may be the special purchase of a major part of the BTC coins that belonged to the creditors of the failed cryptographic money exchange Mt. Gox. The overseers will return the stocks to their rightful owners in early July.

Investors in the share market expressed their worries that this event could lead to massive selling of BTC, as these tokens remained stuck out of the market for a considerable time before they arrived directly to the public all at once.

Bitcoin Long-Term Holder (LTH) Inflation Rate: This metric analyses the market and the behaviours of Bitcoin holders. In traditional finance, the LTH metric is the simplest method to review age distribution. An LTH value of 2.0 indicates high market conditions and predicts selling activity. The LTH value is 1.9, which is close to previous peaks and suggests a potential decrease. Bitcoin Dormancy Flow: This metric tracks how often people spend coins and compares this to overall trends. When Dormancy Flow peaks, it usually signals a market cycle top about three months in advance.

Other Major Cryptos Price Crash in Parallel with the Bitcoin

Ethereum (ETH) has decreased by almost 6% in the last 24 hours, and its current rate is $3,124.78. Solana (SOL) trades at $133.2. Binance Coin (BNB) has also faced a 7% decrease, currently at $520.84. Shiba Inu (SHIB) and Dogecoin (DOGE) lose around 10% each.

Almost $590 million worth of long positions and $90 million in short positions have recently closed out. Over the previous 24 hours, investors have lost more than $150 billion as the crypto market cap fell from $2.24 trillion to $1.99 trillion.

On the other hand, there are more than 17,500 BTC contracts with a notional value of $1.02 billion that are about to become worthless, with a put-call ratio of 0.67. The maximum pain point is 61,500 keys, which means that the price of Bitcoin will be under selling pressure while BTC is trading at less than $54,000 today.

Macro Impacts on Bitcoin Crash

The US dollar index (DXY) crept around 105 on Friday after a three-week low ended the previous session. At the same time, the US 10-year Treasury yield fell to 4.35% after the newest ISM and jobs data pointed to a slower labour market.

Experts foresee that it is up to the market to recover, never mind the timeframe or the practice of betting against cryptocurrencies. They say it will be a period of steadying around the present level, and the value will appreciate up to $58,000 per token at the end of the week.

BTC Price Predictions: When Will Bitcoin Crash Again?

Many are undecided because of the volatile nature of the market. However, some experts still regard Bitcoin as a certain future. 

Analysts at Standard Chartered believe Bitcoin will reach a new all-time high in August and then move towards $100,000 by the presidential election in November. However, this is just one plausible scenario predicting that Donald Trump will be Bitcoin-friendly again. The election may not significantly influence Bitcoin’s value. The situation could go either way; the SEC under Biden could become more crypto-friendly or maintain its current stance.

The recent crash in Bitcoin’s price below $60,000 is an important point in the cryptocurrency market, especially as the New Year begins and we are already three months into the second quarter of 2024.

During the transition through this time of hesitation, investors and analysts will be curious to discern a handful of factors. From trends in the national economy to specific events in crypto, these factors will determine the course of the growth of Bitcoin and the fall of the cryptocurrency market in the coming days.

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