Bitcoin Briefly Falls Below $60,000

The cryptocurrency market is once again in a state of wailing, and these few events might be the "culprits."

The cryptocurrency market is once again in a state of wailing.

Over the past week, Bitcoin has plummeted by nearly $5,000, falling from a high above $66,000 to once breach the $60,000 mark.

This sudden nosedive has left investors and analysts baffled, but it coincides with a significant shift in market sentiment.

The Crypto Fear and Greed Index fell from 60 to 49 in just 13 days, teetering on the edge of moving from "greed" to "neutral."

The sudden drop in Bitcoin's price and the shift in market sentiment have left many wondering about the underlying causes, and several key events in the crypto field seem to have influenced the market trend.

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After news spread that the German government was preparing to liquidate a large amount of Bitcoin, the crypto market experienced significant turmoil.

In 2013, the German Federal Criminal Police Office seized about 50,000 Bitcoins from a pirate website, currently worth over $3 billion.

Reports indicate that German authorities have begun transferring the coins into exchanges and have sold approximately 3,000 Bitcoins in recent days.

However, they still have 47,000 Bitcoins awaiting sale.

This news, which broke a few days ago, may have triggered the initial drop of Bitcoin from $66,000 to $63,000.

The prospect of such a large amount of Bitcoin potentially entering the market has understandably raised concerns among investors.

Currently, the German government appears to be taking cautious measures to minimize the impact on the market, but investor anxiety remains.

The second major factor behind Bitcoin's recent price drop involves the big players in the market, colloquially known as "whales."

Now, the "whales" have suddenly become less active.

Data shows that large transactions (over $100,000) have declined by 42% in just a few days, which is a significant change.

Why is the trading behavior of "whales" so important?

The reason is that when "whales" slow down their trading, it is usually a signal of caution.

For now, this behavior is particularly interesting because it occurs after a period of substantial selling.

This could mean that these large investors might be waiting to see if prices will drop further before they start buying again.

Or they might delay further selling to avoid a rapid decline in prices.

In any case, when "whales" go quiet, it is usually a signal that the market is at a crossroads, and their next moves might provide clues to the future trajectory of Bitcoin.

Mt.

Gox, which was the largest cryptocurrency exchange before its dramatic closure in 2014, has resurfaced and shaken the market once again.

Over a decade after its collapse, Mt.

Gox announced that it would begin reimbursing customers for lost assets, a move that has sent ripples through the Bitcoin market.

Nobuaki Kobayashi, the trustee for Mt.

Gox's reimbursement, announced that repayments for Bitcoin and Bitcoin Cash would begin in early July.

Notably, Mt.

Gox's three wallets hold a total of 141,686 Bitcoins, valued at approximately $8.71 billion.

The market's concern is also straightforward: as creditors finally receive their long-lost Bitcoins, many might rush to cash out.

The potential influx of a large amount of Bitcoin into the market has investors on edge.

The impact was almost immediate.

Bitcoin's price plummeted to $61,060, a 6.5% drop within 24 hours.

Although the price has since rebounded slightly to around $61,300, the market remains uneasy.

It's not just Bitcoin that has been affected; Bitcoin Cash (BCH) has also taken a hit, falling 9% after Mt.

Gox's announcement.

Although the repayment process will begin soon, it is worth noting that it could last for months.

Previously, the repayment deadline was extended to October 2024, giving the market some breathing room.

The recent drop in Bitcoin's price is not solely due to external factors.

A key internal market mechanism has played a critical role in amplifying the decline, namely the liquidation in the derivatives market, which can be seen as the domino effect in the crypto world.

As Bitcoin's price began to slide, it triggered a chain reaction in the derivatives market.

According to Coinglass, $302 million worth of cryptocurrency positions were liquidated within 24 hours.

Of this $302 million, $220 million were long positions.

In short, the vast majority of these liquidations hit traders who had bet on the rise in cryptocurrency prices.