Bitcoin’s decline saw its value drop below $55,000 as the price fell below its 200-day moving average.
The downturn comes as Mt. Gox has begun refunding customers after a decade-long bankruptcy process, which should see the return of about $9 billion in Bitcoin.
The new influx comes as market analysts expect the German government to sell its Bitcoin holdings, which will also put pressure on markets.
How bad will the downturn be?
That’s what the experts say.
David Brickell of FRNT
David Brickell, FRNT’s Head of International Distribution, said DL News It’s hard to say how far Bitcoin will fall.
Yet he sees signs that the crisis may be turning around.
“Macro factors are positive with the dollar falling and yields falling on expectations of Fed rate cuts and improved liquidity as major central banks adopt looser policies,” Brickell said.
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There are several factors that point to a turnaround.
“This latest flush could be enough to attract the dip buyers who have been sidelined, but remains bullish longer term and could potentially kick off the next leg of the bull market,” Brickell said. “Bulls will be wary.”
Rachel Lin from SynFutures
Rachel Lin, co-founder and CEO of decentralized crypto derivatives exchange SynFutures, said the Bitcoin drop is due to market expectations that Mt. Gox users will dump their tokens,
But “we could see a recovery if sales are lower than expected,” she said. DL News.
Lin added that it’s possible Bitcoin’s price could drop even further: “If enough is sold to push the price down even further, we could be looking at the $50,000 level soon.”
Brad Howell from Keyrock UK
Negativity over the impact of Mt. Gox’s potential $9 billion dump on the market may just be sentiment.
That’s according to Brad Howell, director of crypto market maker Keyrock UK.
“We have to put this into perspective,” Howell said DL News earlier this year.
According to Howell, Bitcoin’s daily trading volume averaged $30 billion in March, and the market processed $72 billion in trading volume when Bitcoin dropped 8% on March 19.
“That should give you an idea of the volume it takes to move a market of this size,” he said.
Howell also said he did not expect Mt. Gox creditors to sell their assets, as they are likely early adopters who will likely hold on to their Bitcoin.
“Don’t expect huge amounts to be dumped on day one,” he said.
Adam Morgan McCarthy of Kaiko
Adam Morgan McCarthy, an analyst at digital financial data firm Kaiko, said Bitcoin’s liquidity will play a major role in price action over the summer.
“Liquidity tends to dry up in the summer months. We are already seeing this happening,” he said DL News.
“This means there is less support when there is selling pressure and prices can move more sharply. I expect this to continue throughout July, August and September.”
Jacob Joseph from CCData
Jacob Joseph, research analyst at CCData, said DL News there is reason to be optimistic, “despite the current challenges.”
He cited growing adoption of cryptocurrencies among institutional players – for example through spot Bitcoin exchange-traded funds – and the US elections serving “as positive catalysts” for a rally.
In the US, both President Joe Biden and Republican presidential hopeful Donald Trump have become enthusiastic about crypto.
Joseph said he will be watching for seasonality during the summer, which often leads to lower institutional trading activity.
He will also keep an eye on key macroeconomic factors, including inflation and the Federal Open Market Committee meeting later this month, for further clues.