Bitcoin prices have fallen nearly 12% over the past week to about $55,700 at noon ET on Monday. Experts Say Raw Cryptocurrency’s Latest Drop wealthlargely due to increased on-chain sales.
Matteo Greco, a research analyst at investment firm Fineqia International, said one catalyst for the recent sell-off came from returns from Mt. Gox. The Tokyo-based cryptocurrency exchange went bankrupt due to hacks a decade ago, but it has begun returning about $8 billion in Bitcoin to creditors.
According to Greco, so far, 47,228 Bitcoins from Mt. Gox-related wallets have been confirmed to have been transferred to new addresses that may have been designated for repayment. While investors may have to wait up to three months to get their money, news of the repayments spooked the market and prompted existing holders to start selling, Greco said.
‘Limited’ selling pressure
This pressure has been exacerbated by recent moves by the German and US governments to move Bitcoin to exchanges. According to statistics, in about two weeks, wallet addresses associated with these countries have sent $737.6 million worth of Bitcoin to Coinbase, Bitstamp, Kraken and Flow Traders. Bullock Engineering. The bitcoins in question are believed to have been seized by authorities through various criminal cases.
But narrowing the scope further, the coin has failed to gain momentum since mid-March, when it hit an all-time high of just over $73,000. Greco said the MVRV ratio (market value to realized value) is currently around 1.5, indicating an average unrealized profit for market participants of 50%. “This is a sharp decrease from the values above 3 observed in March,” he added.
In addition, after the Bitcoin halving in April, selling pressure remained strong and miners’ rewards for minting new coins were reduced by 50%. Greco said that while this pressure has shown signs of easing in recent days, it still exceeds demand, exacerbating short-term price declines.
If the current pullback continues into the end of the week, Bitcoin will have fallen for five consecutive weeks, its longest span since the 2022 bear market. Andrew Baehr, head of product at CoinDesk Indices, said traders “don’t want to face the billions of dollars of supply that could hit the market in the coming weeks.” wealth.
Bell added that while these market pressures are growing in the short term, they are still “limited” and from a historical perspective investors can expect some sort of resolution, which he likened to the market “cleaning up dirty dishes.” ”. Potential new adoption waves could be larger and could be a source of support pushing prices higher.
What about “Trump Trade”?
As markets look for a way out of nearly four months of trouble, some are looking to the possibility of a “Trump trade” to move markets — a term that, in the former president’s scenario, refers to a year-end rally. victory in the October election. After President Joe Biden’s disastrous presidential debate last week, some believe the likelihood of a crypto-friendly president is increasing.
Trump has sought to mine every dollar and vote he can from the crypto industry in recent months, including inviting executives from publicly traded Bitcoin miners CleanSpark and Riot Platforms to events at Mar-a-Lago. In the weeks leading up to that meeting, Trump allegedly sought advice from Elon Musk on developing cryptocurrency policy, according to Bloomberg. His presidential campaign also began accepting donations via any crypto asset Coin library.
