Bitcoin
Is Bitcoin bottoming? Here’s what the experts say
In the rollercoaster ride that is the price of Bitcoin, cryptocurrency market participants may be wondering whether the latest drop was stomach-churning enough as the asset climbs back towards $62,000.
Bitcoin got some relief on Tuesday after a especially hasty day. But the asset fell mainly during the month of June. Coming down from $71,000 amid a flash crash weeks ago, the asset’s price has plummeted as much as 16% since approaching all-time highs.
The drop became noticeable as investors digested the Federal Reserve’s aggressive tones, said Dessislava Aubert, an analyst at Kaiko. Decrypt in a statement. By reducing rate cut projections to one this year after the June policy meeting, the Fed’s move weighed on risk assets, she wrote.
But that doesn’t capture the full picture, with crypto-specific factors. Grayscale Managing Director of Research Zach Pandl said Decrypt in an interview that Bitcoin’s fundamentals have not changed in recent days, and the pressure can be explained by three main factors.
Outflows from spot Bitcoin ETFs, combined with the sale of Bitcoin seized by the German governmentIt is expected sale of Mt. Gox creditors created an “overhang,” he said.
“We don’t know exactly how long this will last and we don’t know how many sales there will be of Mt Gox-related assets,” Pandl said. “But since the fundamentals haven’t really changed, I think we can anticipate that valuations will eventually recover once this passes.”
The dynamics that influence the price of Bitcoin can be compared to “locked boxes”, according to Bitwise CIO Matt Hougan. On a publish on Twitter (aka X), he explained that several crypto bankruptcies or seizures have historically driven Bitcoin off the market and reduced supply. But this is changing.
The latest Bitcoin unlock event is the Monte refund. Gox customers, who lost 740,000 Bitcoin when the exchange was hacked in 2014. Although Mt. Gox has recently moved around $9.6 billion in recovered Bitcoin, some analysts believe that much less will hit the market soon.
Galaxy Digital head of research Alex Thorne estimated that 6,500 Bitcoin could be “dumped onto the market” if the majority of investors who receive Bitcoin back from Mt. It’s likely he he wrotewhereas Mt. Gox customers are early adopters and would have to pay capital gains.
Kaiko’s Aubert noted that there has been “increased selling pressure from large Bitcoin holders such as miners,” which does not bode well for the summer. Asset volume has been historically low and these two factors could exacerbate market volatility, she wrote.
For crypto, there are still price catalysts on the horizon, Grayscale’s Pandl said. When spot Ethereum ETFs are eventually approved for negotiation this summerhe suggested this could create a rising tide for the overall crypto market.
“The potential for Ethereum ETF approvals is a huge positive catalyst, potentially coming in the coming weeks,” he said. “So my outlook would remain constructive on the asset class and I think these are reasonably attractive entry points for investors who have a longer time horizon.”
In addition to the crypto market, Wall Street’s AI darling has also faced recent headwinds. After becoming the world’s most valuable company, Nvidia shares fell 7% last week to trade at around $121.33, while the tech-heavy Nasdaq also retreated slightly.
Edited by Ryan Ozawa.