Why is Bitcoin Dumping?
Bitcoin has taken a wild turn to the downside.
With a new monthly low of $60.5k, Bitcoin is experiencing major sell pressure. While many didn’t see it coming, it’s a minor blip and a buying opportunity. Don’t be afraid to top up your bags as we prepare for the next climb.
But why is Bitcoin falling? Let’s find out…
Mt. Gox Distribution
The now-defunct Mt. Gox exchange is ready to fulfil its promise to give $BTC and $BCH back to creditors.
As of July 2024, the exchange will start distributing over $9 billion of BTC and BCH. A big enough amount to strike fear into the market and cause the price of BTC to fall fast. The market’s reaction has been driven by news and speculation, with some analysts suggesting that the impact might be more severe than warranted.
The amount being distributed is a small fraction of Bitcoin's total circulating supply, so the direct effect on its price should be minimal.
Miner Capiluation
In the month of June, $BTC miners ' sales reached a monthly high.
The current miner capitulation has lasted 33 days, with the average duration being 41 days. This prolonged period is due to the halving event, which reduced block rewards, making mining less profitable. We will see fewer miner outflows once difficulty levels stabilise, and with only a 12% drop in the hash rate from its May peak, the good times are set to return soon.
So, we might say the bottom is in.
ETF Outflows
Since June 15, Bitcoin ETFs have experienced nearly $1B in outflows.
Why? Many factors are in play here. Let’s look at some key factors causing this huge ETF downhill run.
Are you ready?
1. Federal Reserve’s Hawkish Stance
The U.S. Federal Reserve’s decision to maintain high interest rates and its cautious outlook on future rate cuts have created a risk-averse environment among investors. Higher interest rates generally make riskier assets like crypto less attractive, leading to substantial outflows from Bitcoin ETFs.
2. Macroeconomic Factors
Mixed economic signals from the U.S., including persistent inflation and high interest rates, have contributed to a broader risk-off sentiment in the market. This has led investors to pull out Bitcoin ETFs and other risk assets. The strength of the U.S. dollar against other currencies has further pressured Bitcoin prices
3. Market Pressures and Supply Overhang
The market is also dealing with a significant supply overhang, exacerbated by events such as the sale of seized Bitcoin by the German government and the impending repayments from Mt. Gox. These factors have added additional selling pressure on Bitcoin, contributing to the outflows from ETFs.
4. Technical Market Movements
Bitcoin’s recent price movements have also played a role. The crypto has been unable to break through key resistance levels, leading to a technical correction. This has further shaken investor confidence, prompting more withdrawals from Bitcoin ETFs
The German Government
German government Seized Bitcoin is up for sale.
The German government has initiated a sell-off of Bitcoin, which has had an evident impact on the crypto market. They are believed to have seized over 50,000 Bitcoins from the piracy website movie2k.to. Since June 18, they have been moving $BTC to a number of exchanges.
They have sold around 3,000 Bitcoins. Will they sell more? Or will they wait with the rest of us for a $BTC moon to six figures?
There you have it.
4 reasons why we’re seeing Bitcoin trading as low as $60,500. Short-term woes for long-term gains. HODLers will be rewarded, eventually.
Don’t let fear rob you of what is coming!
