Key Points
- Bitcoin’s price has fallen over 5% following Mt. Gox’s announcement of $9 billion in repayments starting in July.
- Investors are taking a risk-off approach to Bitcoin due to market concerns and rumors of large-scale offloading.
The price of Bitcoin experienced a downturn on Monday, falling by over 5% following an announcement from Mt. Gox. The defunct Bitcoin exchange revealed plans to distribute $9 billion in Bitcoin and Bitcoin cash repayments from July. This news has pushed the price of the leading digital asset close to the $60,000 mark, a low not seen in nearly six weeks.
Market Reaction to Mt. Gox Repayment Announcement
Research analyst Ryan Lee describes the response to Mt. Gox’s repayment announcement as a classic ‘sell the news’ scenario. The repayment in Bitcoin is causing market concerns about an oversupply, and it’s probable that beneficiaries will sell their coins to capitalize on the significant gains made over the past decade.
Despite the sizable $9 billion repayment, Lee notes that several factors might bolster Bitcoin’s resilience. In the macro environment, the Fed Net Liquidity Index has topped $6.5 trillion, releasing $400 billion of liquidity into the market. Combined with potential rate cuts, Bitcoin could resist the negative impact of the Mt. Gox selloff.
Investors Adopting a Risk-Off Approach
Neil Roarty, an analyst at Stocklytics, suggests that there has been a fundamental shift in both market and mood. He points out that Bitcoin no longer seems to be tracking the Nasdaq, which hit record highs last week. This shift is occurring alongside rumors that whales, including some of the biggest miners and even the German government, are selling their holdings. If this negative sentiment continues, the symbolic $50,000 mark could be a near-term possibility.
Roarty also mentioned that fortunes in the crypto market can reverse extremely quickly. This observation follows a forecast by CryptoQuant analysts who stated that Bitcoin is trading below a critical support level. Falling under this threshold could suggest a potential 8%-12% correction toward $60,000. A drop below the $60,000 mark would be a significant fall, reaching a level not seen since May 3.
At the time of writing, Bitcoin was trading around $60,149, having fallen 5.7% in the past 24 hours. The price of Ethereum has also dipped over 6% to $3,345 in the same period. The global cryptocurrency market cap is currently $2.33 trillion, having dropped 5% in the last 24 hours.
