In a significant market decline, Bitcoin price has fallen below $57,000, hitting a low of $56,950 in early European trading hours on Thursday.
This price has not been this low since early May and represents a drop below the crucial 200-day moving average of $58,492.
The world’s largest cryptocurrency by market cap has now suffered a three-day decline, raising concerns among investors and analysts alike.
According to market experts, the sudden price drop can be attributed to several factors.
A notable development is the transfer by the German government of approximately 1,300 BTC, worth $75.53 million, to major crypto exchanges Bitstamp, Coinbase and Kraken.
The transaction, reported by blockchain analytics firm Arkham, is the largest transfer to centralized exchanges in recent times and has likely contributed to increased selling pressure.
Adding to the uncertainty in the market is the expected redemptions from Mt. Gox, which are expected to begin in early July. According to data from Arkham Intelligence, several wallets linked to Mt. Gox made small Bitcoin transfers earlier today, the first time they’ve been active in a week.
Some of the Bitcoin was sent to a wallet identified by Arkham as belonging to Bitbank, one of the exchanges selected to manage the repayments of Mt. Gox creditors. Arkham Intelligence indicated that these transactions involved three wallets connected to the defunct exchange, with the largest transfer being approximately $24.
It is believed that this is a test transaction in preparation for the significant customer refunds planned for this month.
This long-awaited distribution will return more than $9.4 billion worth of Bitcoin to approximately 127,000 creditors who have been waiting for repayment for more than a decade.
The influx of such a large number of Bitcoins into circulation could put further downward pressure on the market.
The price drop has also caused a wave of liquidations in the derivatives market.
According to data from CoinGlass, $100.4 million in Bitcoin liquidations have now occurred, with over $86 million in leveraged long positions being forced closed.
According to 10x Research, $60,000 was a key level for Bitcoin miners and buyers of Bitcoin Spot ETFs. It also largely marked the bottom of the trading range over the past three months.
“Only uninformed traders are willing to buy here. Breaking this support could trigger a sharp drop to the low $50,000s,” the report said.
“Unfortunately, many still appear to be very long in Bitcoin, while a correction towards $50,000/$55,000 could have provided much better re-entry levels,” it added.
Analysts at Bitfinex told Decrypt that Bitcoin has pulled away from US stocks, while long-term Bitcoin holders, who had stopped selling in early May, have returned.
“Meanwhile, excess supply continues to weigh on the market, with potential selling by Mt. Gox depositors and the Bundeskriminalamt, Germany’s federal police agency, who may be tempted to sell their recent Bitcoin windfall,” the analysts said.
Edited by Stacy Elliott.
