Source: Jin10 Data
Cryptos market is once again in chaos, and these events may be the culprits behind it.
The cryptocurrency market is once again in a state of despair.
In the past week, bitcoin has fallen by nearly $5,000, dropping below the $60,000 mark from the high of over $66,000.
This sudden plunge has left investors and analysts puzzled, but it coincides with a significant shift in market sentiment. The cryptocurrency fear and greed index has fallen from 60 to 49, on the verge of shifting from "greed" to "neutral," in just thirteen days.
The sudden drop in bitcoin prices and the change in market sentiment have left many wondering what is behind the scenes, and the following key events in the crypto field seem to be affecting the market trend.
1. The German government sells bitcoin.
The cryptocurrency market experienced significant turmoil after news broke that the German government was preparing to liquidate a large amount of bitcoin. In 2013, the German Federal Criminal Police seized about 50,000 bitcoins from a pirated website, currently worth more than $3 billion.
Reports suggest that German authorities have begun transferring coins to exchanges and have sold about 3,000 bitcoins in the past few days. However, it still has 47,000 bitcoins waiting to be sold. The news exposed a few days ago may have caused bitcoin to drop from $66,000 to $63,000.
The prospect of such a large amount of bitcoin entering the market has raised concerns among investors, which is understandable. Currently, the German government seems to be taking cautious steps to minimize its impact on the market, but investor anxiety still exists.
2. "Whales hit the brakes."
The second major factor behind the recent drop in bitcoin prices involves big players on the market, commonly known as "whales."
Now, the "whales" have suddenly become less active. Data shows that large transactions (over $100,000) have decreased by 42% in just a few days, a significant change.
Why is the trading behavior of "whales" so important? The reason is that when "whales" slow down their trading speed, it is usually a cautious signal. For now, this behavior is particularly interesting because it occurs after a period of heavy selling.
This could mean that these large investors may be watching to see if prices will fall further before buying again. Or they may delay more sales to avoid prices falling too quickly.
In any case, when "whales" quiet down, it is usually a signal that the market is at a crossroads, and their next move may provide clues to the future trend of bitcoin.
3. Mt. Gox repayment.
Mt. Gox was once the largest cryptocurrency exchange before it dramatically closed in 2014. The collapse of this exchange has once again shaken the market. After more than a decade of bankruptcy, Mt. Gox announced that it will begin repaying lost assets to clients, a news that has caused ripples in the bitcoin market.
Nobuaki Kobayashi, the trustee of Mt. Gox's repayment, announced that repayments in bitcoin and bitcoin cash will begin in early July.
It is worth noting that the three wallets held by Mt. Gox together hold 141,686 bitcoin, worth about $8.71 billion. The point of concern for the market is simple: as creditors finally get their long-lost bitcoins, many may be eager to cash them in. A large amount of bitcoin may flood the market, causing anxiety among investors.
The impact was almost immediately apparent. Bitcoin's price plummeted to $61,060, down 6.5% in the past 24 hours. Although bitcoin's price has since rebounded slightly to around $61,300, the market remains nervous.
It is not just bitcoin, but bitcoin cash (BCH) has also suffered a blow, falling 9% after Mt. Gox's announcement.
Although the repayment process will start quickly, it is worth noting that it may last for several months. Previously, the repayment period was extended to October 2024, which gave the market some breathing space.
4. Domino effect.
The recent decline in bitcoin prices is not only caused by external factors. An important internal market mechanism has played a key role in amplifying the downward trend, namely, the clearing of the derivatives market, which can be seen as a domino effect in the crypto world.
As bitcoin's price began to decline, it triggered a chain reaction in the derivatives market. According to Coinglass, crypto positions worth $302 million were liquidated in the past 24 hours.
Of the $302 million, $220 million were long positions. In short, this means that the vast majority of these liquidations hit traders who bet on rising crypto prices.
Editor/Lambor