Over the past 24 hours, the price of Bitcoin (BTC) has fallen as much as 4.8%, falling to a new low of $60,601 after trading above $64,000 just the previous day. This decline may be due to a combination of factors, including developments from the history of Mt. Gox, the significant liquidation of long positions, and ongoing mining scams.
#1 Stories of Mt. Gox Shakes Market Confidence
The sudden and drastic drop from $62,900 to $60,601 in the price of Bitcoin coincided closely with a new announcement from the operators of the defunct Bitcoin exchange, Mt. Gox. The exchange, which is among one of the earliest and largest Bitcoin thefts, has announced that it will begin refunding victims using the assets stolen in the 2014 hack in July 2024.
According to Nobuaki Kobayashi, the recovery trustee, the recovery process will include Bitcoin (BTC) and Bitcoin Cash (BCH) and will begin in early July. “The Rehabilitation Trustee was preparing to make payments in Bitcoin and Bitcoin Cash under the Rehabilitation Plan. […] The payment will be made from the beginning of July 2024,” reads the announcement.
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The news was viewed negatively by the market, primarily due to fears of over-trading from investors who may sell assets that have appreciated significantly since their initial investment period before 2013. In May 2023, the trustee moved more than 140,000 BTC, worth about $9 billion.
The transaction was significant as it was the first move for these funds in five years, closely watched by analysts and traders. The market reaction was immediate; Bitcoin prices are falling as speculation about a potential market flood with these restored coins is taking hold.
#2 Record the Liquidation of Long Positions
Adding to the downward pressure, there was a significant increase in the liquidation of long BTC positions. According to the latest data from Coinglass, long positions of $85.4 million were liquidated. This event marks the largest liquidation since April 30 and May 1, when more than $195 million ($95 million and $100 million respectively) were long liquidated, corresponding to a 12.5% price drop on those days. two.
Such closures occur when the market price reaches the liquidation value of the active positions, which causes automatic selling to cover the losses, which further lowers the price. This effect has a major impact on the rapid decline in prices and market volatility.
#3 Continued Miner Capitulation Adds Selling Pressure
The third critical factor affecting the price of Bitcoin is the ongoing mining of miners. Capitulation of miners refers to the situation where miners, especially the less efficient ones, start selling their mining BTC to cover the operating costs due to lack of profit. This phase can have significant downward pressure on Bitcoin prices as it increases the supply of Bitcoin for sale in the market.
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As reported by NewsBTC, well-known crypto analyst Willy Woo and others have pointed out that the appointment of miners is an important phase to be monitored, especially following the events of the Bitcoin debasement which reduces the rewards of miners by half, thus hampering their profits. Woo noted recently that the recovery of the emergence of such documents has historically been slow and closely related to the resurgence of mining activity and hash rates.
Crypto expert Jelle, speaking on X, emphasized the ongoing nature of this release today, saying, “Hash Ribbons show that the capture of miners continues – exactly what you want to see after a halving. Usually, the market starts to converge when that the sales phase ends.”
At press time, BTC traded at $61,241.
Featured image from iStock, chart from TradingView.com
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