Bitcoin is under renewed pressure due to concerns about potential sales by creditors of the defunct Mt. Gox exchange, casting doubts on the sustainability of the crypto bull run that began last year.
The largest digital asset dropped as much as 5.2% on Monday before recovering slightly to trade at $55,800 as of 8:30 a.m. in London, still $18,000 below its record high in March. Other cryptocurrencies, such as Ether and XRP, also struggled.
Tokyo-based Mt. Gox, which went bankrupt a decade ago following a hack, is in the process of returning approximately $8 billion worth of Bitcoin to creditors in stages. This has raised concerns about a potential influx of supply into the market.
Sentiment has been further dampened by signs of Bitcoin disposals by the German government and waning inflows into dedicated US exchange-traded funds (ETFs). There is growing skepticism among some analysts about whether Bitcoin can reach the $100,000 mark as predicted by its most ardent supporters.
Technical Test
Analysts are closely examining charts for signs that Bitcoin’s recent decline might be nearing an end. Tony Sycamore, a market analyst at IG Australia Pty, noted that a sustained rise above the 200-day moving average could indicate that Friday’s intraday low of about $53,600 marked a “capitulation.”
Prolonged Losses
Bitcoin entered Monday with a significant slide. If the downturn continues through Sunday, it will mark five consecutive weeks of declines, the longest losing streak since the 2022 digital-asset bear market. Stefan von Haenisch, head of trading at OSL SG Pte, warned of a potential “grind lower” in prices until the Federal Reserve starts loosening monetary policy.
Market Comparison
Earlier this year, Bitcoin’s year-to-date gain approached 70%, significantly outpacing traditional assets like stocks. However, the tech-heavy Nasdaq 100 index is now closing in on Bitcoin’s slumping performance. Despite recent selloffs, Khushboo Khullar, venture partner at Lightning Ventures, maintains a positive long-term outlook for Bitcoin.
Spot-ETF Flows
Strong demand for US Bitcoin ETFs initially fueled the digital asset’s record-breaking rise earlier this year. Though inflows have since moderated, the recent price weakness raises questions about investor sentiment. Nevertheless, last Friday saw the strongest net inflow into Bitcoin ETFs in about a month, suggesting some investors are buying the dip.
Hayden Hughes, head of crypto investments at Evergreen Growth in Singapore, noted that while the Mt. Gox dispersal is unlikely to trigger mass selling by creditors, a prolonged period below $60,000 increases the likelihood of a further price correction.
Options Market
The options market indicates that some investors see Bitcoin’s dip as temporary, with a high concentration of bullish bets around the $100,000 strike price. This may reflect expectations of a more accommodating Federal Reserve monetary policy in the near future and support for pro-crypto candidate Donald Trump’s presidential bid.
Caroline Mauron, co-founder of digital-asset derivatives liquidity provider Orbit Markets, expects crypto to follow global market trends ahead of testimony from Fed Chair Jerome Powell and US inflation data due this week, which may influence monetary policy projections.
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