Bitcoin
Bitcoin Prices Jump Nearly 6% After Falling to Lowest Level Since February
Bitcoin prices rebounded today after falling to a four-month low. (Photo by Chesnot/Getty Images)
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Bitcoin prices rebounded today, rising after falling to their lowest level in more than four months amid weak market conditions.
The world’s top digital currency hit $56,856.61 this afternoon, according to CoinMarketCap Data.
At this point, the cryptocurrency was up more than 5.8% after falling to $53,717.34, its lowest since late February, shortly after midnight ET, additional figures from CoinMarketCap show.
After hitting the aforementioned daily high of $56,800, the digital asset saw some volatility but held on to most of the gains generated earlier today.
Explaining bitcoin’s recent price fluctuations, several analysts have stated that the digital currency became oversold when it dropped over the past 24 hours.
Several media reports pointed to the announcement that the administrator of Mt. Gox has started making payments to certain creditors as the reason why the digital currency fell to its lowest value in more than four months in the last 24 hours.
Tim Enneking, Managing Partner at Hallcommented on this development, but emphasized that several factors contributed to the losses in bitcoin.
“In a market that was already relatively weak due to post-ATH consolidation, the usual summer lull, and the SEC releasing the actual launch date for spot ETH ETF trading, concerns about BTC dumping by Mt. Gox recipients (whether well-founded or not) clearly constituted the straw that broke the camel’s back and sent spot BTC prices down from $60k to nearly $53k,” he said in emailed comments.
Independent cryptocurrency analyst Armando Aguilar also emphasized that several variables contributed to the decline in digital currency markets.
“As new supply came into the market from the Mt. Gox Trustee, it showed BTC transfers to unknown addresses, and the German government also preparing to unload additional supply. A low-level fear and greed spooked the market, all of these factors sent prices tumbling across the board,” he said via emailed comments.
When prices fell, bitcoin was oversold, which caused the digital currency to rally, Aguilar added.
Julio Moreno, head of research at CryptoQuantalso spoke out, offering a different view of the situation.
“Prices fell mainly due to selling/profit taking by large investors (whales) and mid-sized miners,” he said via Telegram.
“The sale by Mt. Gox and other entities (German government) is relatively small compared to the overall pool of Bitcoin money,” Moreno added.
“Several on-chain metrics signaled oversold territory after prices hit $53K, which could be why they rebounded sharply. For example, traders’ unrealized profits hit negative levels not seen since the FTX collapse.”
He included the chart below, which uses data from CryptoQuant, to illustrate these developments:
Bitcoin On-Chain Trader’s Realized Price and Profit-Loss Margin
CryptoQuant
Moreno also emphasized that the amount of money seized by the US and German governments represents a very small fraction (approximately 1.6%) of the total realized value of bitcoin.
The difference can be visualized using the graph below:
Bitcoin’s Realized Limit vs. the Value of Bitcoin Seized by the US and German Governments
CryptoQuant
Going forward, the Mt. Gox sales may not be as big a drag on cryptocurrency markets as some might think, said Enneking, who noted that investors who get their bitcoins back are unlikely to sell them immediately.
“Unless one assumes that all Mt. Gox BTC recipients are idiots,” “they won’t abruptly dump their long-awaited BTC immediately upon receipt — and since they’ve waited 10 years, what’s another few months waiting for the price to recover?” he said.
“So at some level, BTC is clearly oversold and apparently the market believes that level is around 50 to 55%,” Enneking said.
“Either way, once BTC is actually distributed and the sky miraculously doesn’t fall, BTC will enjoy an immediate and very healthy recovery!” he predicted.
Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, EOS, and SOL.