After briefly crossing above $71,000 in early June, Bitcoin (BTC) has since entered into its biggest downturn of 2024. Indeed, the cryptocurrency first lost its relatively stable, multi-month level near $67,000 and then collapsed through several consecutive support zones.
By July 5, Bitcoin price stood at $54,413 – the lowest it has been since late February.
BTC 30-day price chart. Source: Finbold
Though there are many possible explanations for BTC’s fall, investors have increasingly been looking at a convergence of events, all carrying the danger of significant selling pressure.
For weeks, the German government has been moving the nearly 50,000 Bitcoin it announced seized at the start of 2024 onto crypto exchanges, and cryptocurrencies in U.S. custody have also been on the move.
Finally, in the small hours of July 5, Mt. Gox, a Bitcoin exchange that went bankrupt a decade earlier, announced it would finally begin repaying its creditors – a move that has been anticipated since May.
Did Mt. Gox repayments crash Bitcoin?
While the massive moves – totaling nearly 100,000 BTC when German and Mt. Gox cryptocurrency are combined – have made investors nervous, it is equally, if not more likely, that it was the fear of a major selloff that triggered the ongoing crypto market wipe.
Nonetheless, the bloodbath – which saw approximately $130 billion wiped on July 4 and another $100 billion within just 60 minutes on July 5 – may be exacerbated by the expected return of BTC to Mt. Gox’s creditors should they decide to start selling quickly.
While substantial corrections are frequent in the crypto markets, the current downturn may prove particularly dangerous. Bitcoin has already fallen below several crucial support levels, entering an apparent freefall that may see the coin fall to or below $50,000.
Indeed, in recent months, BTC has been bouncing off $65,000 relatively reliably.
Even during the May fall, when the world’s foremost cryptocurrency briefly fell below $57,000, it quickly recovered. The important support zones were also highly visible during the ongoing drop as Bitcoin first found its footing near $61,000 and subsequently found its footing for several hours on July 4 above $57,000.
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