In the past week, Bitcoin‘s price has dropped nearly 12%, settling at about $55,700 as of noon ET on Monday. Experts attribute this decline to a surge in on-chain selling activities.
A significant trigger for this selloff is repayments from Mt. Gox, the Tokyo-based crypto exchange that went bankrupt a decade ago. Matteo Greco, a research analyst at Fineqia International, notes that Mt. Gox has started returning about $8 billion in Bitcoin to creditors. So far, 47,228 Bitcoin from a Mt. Gox-associated wallet have moved to a new address likely designated for repayments. Although investors might have to wait up to three months to access these funds, the news has spooked the market, prompting current holders to sell, according to Greco.
Adding to the pressure, the German and U.S. governments have recently transferred Bitcoin to exchanges. Over approximately two weeks, wallet addresses linked to these governments sent $737.6 million in Bitcoin to platforms like Coinbase, Bitstamp, Kraken, and Flow Traders, as reported by Blockworks. This Bitcoin was seized by authorities through various criminal cases.
Bitcoin has struggled to regain momentum since mid-March, when it hit record highs of just over $73,000. The market value versus realized value (MVRV) ratio is now around 1.5, indicating an average unrealized profit of 50% among market participants, down from over three in March, says Greco. This decline follows April’s Bitcoin halving, which reduced miners’ rewards for minting new coins by 50%. While the selling pressure has shown signs of easing recently, it still exceeds demand, exacerbating the short-term price drop.
If the downturn continues through the end of the week, Bitcoin will have been in decline for five consecutive weeks, the longest stretch since the 2022 bear market. Traders are cautious about the potential influx of Bitcoin hitting the market in the coming weeks, according to Andrew Baehr, head of product at CoinDesk Indices. However, Baehr points out that these pressures are “finite,” and historically, the market has resolved such situations, comparing it to “cleaning up dirty dishes.” He suggests that new waves of adoption could eventually support and drive prices higher.
As the market seeks a rebound, some are speculating about a potential “Trump Trade”—a market rally toward the year’s end if former President Donald Trump wins the upcoming election. Following a poor presidential debate performance by President Joe Biden last week, some believe the chances of a crypto-friendly president are increasing. In recent months, Trump has actively courted the crypto industry, engaging with executives from Bitcoin mining companies and reportedly seeking advice from Elon Musk on his crypto policy. His campaign has also started accepting donations via various crypto assets through Coinbase.
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