Source: Wall Street See
Since being caught in the 'Three Witch Days' adjustment last week, Nvidia has continued to fall, dragging down the Nasdaq. At the same time, the cryptocurrency market has also undergone a significant correction.
As of Monday's closing, the price of Bitcoin fell to $59,191.39, hitting a new low since early May. Bitcoin has fallen 12% this month so far.
Despite this, compared to the price below $43,000 at the end of last year, Bitcoin is still at a high level in 2024.
Multiple factors have led to the current market trend. Ilan Solot, senior global market strategist at London financial firm Marex Solutions, pointed out that the news that German authorities are selling Bitcoin seized from criminal activities, as well as the news that the bankrupt exchange Mt. Gox will begin repaying Bitcoin to creditors, could increase market supply pressure.
The latest development in the Mt. Gox bankruptcy case is particularly noteworthy. This exchange was hacked multiple times between 2011 and 2014, resulting in a large amount of lost Bitcoin, and eventually went bankrupt in 2014.
After nearly a decade of waiting, Mt. Gox will begin returning Bitcoin to customers in July 2024. Although the specific quantity has not been determined, it is estimated to be between 65,000 and 140,000 Bitcoins. Calculated at the current price, the maximum value could reach nearly $9 billion.
This large-scale supply will soon enter the market, causing investors to worry about a price drop. Some media outlets have pointed out that the additional Bitcoin supply is equivalent to more than half of the inflow into ETFs.
Since the Bitcoin spot ETF began trading on January 11, its net inflow has exceeded $14.5 billion, and it is considered one of the main factors driving the significant rise in Bitcoin prices.
However, Alistair Milne, Chief Investment Officer of Altana Digital Currency Fund, believes that the selling pressure on Bitcoin caused by the Mt. Gox incident may be overestimated. He emphasized on Twitter that those creditors of Mt. Gox who urgently need funds had ten years to sell their claims, and those who still hold on to their claims will not be in a hurry to sell Bitcoins.
Analysts point out that in addition to the risk of increased supply, the deeper reason for the correction in Bitcoin may be that investors are reassessing the attractiveness of cryptocurrencies compared to other investment products. Ilan Solot believes that in the current cycle, cryptocurrencies may not be able to provide sufficient risk-return ratios compared to technology stocks.
Editor / jayden