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In the past 24 hours, the price of Bitcoin (BTC) has fallen by as much as 4.8%, falling to a new low of $60,601 after trading above $64,000 just the previous day. This decline can be attributed to a combination of factors, including developments from the Mt.Gox saga, significant liquidation of long positions, and continued capitulation of miners.
#1 Mount Jokes news shakes market confidence
The sudden and sharp drop from $62,900 to $60,601 in the price of Bitcoin closely coincided with a new announcement from the trustees of the defunct Bitcoin exchange, Mt.Gox. This exchange, which is the focus of one of the oldest and largest Bitcoin thefts, announced that it will begin paying compensation to victims using assets stolen from the 2014 hack in July 2024.
According to Nobuaki Kobayashi, the rehab trustee, the payment process will include Bitcoin (BTC) and Bitcoin Cash (BCH) and will begin in early July. “The Rehabilitation Trustee is preparing to make payments in Bitcoin and Bitcoin Cash under the Rehabilitation Plan […] Payment will be made starting from the beginning of July 2024.” advertisement is reading.
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This news was viewed negatively by the market, primarily due to fears of oversupply from beneficiaries who would potentially sell assets that had appreciated significantly since their initial investment period before 2013. In May 2023, the trustee transferred over 140,000 Bitcoin, worth approximately $9 billion.
This deal was significant because it was the first movement of this money in five years, and it was closely followed by analysts and traders. Market reaction was immediate. Bitcoin prices fell Like speculation About possible flooding of the market with these repaid coins.
#2 Standard liquidations of long positions
Adding to the downward pressure, there has been a notable increase in the liquidation of long BTC positions. According to another Data From Coinglass, $85.4 million worth of long positions were liquidated. This event represents the largest liquidation since April 30 and May 1, when over $195 million ($95 million and $100 million, respectively) of long positions were liquidated, correlating with a 12.5% price decline over those two days.
Such liquidation occurs when the market price reaches the liquidation price of leveraged positions, triggering automatic sales to cover losses, causing the price to fall further. This cascading effect contributes significantly to the rapid decline of prices and increased market volatility.
#3 Continued miner capitulation increases selling pressure
The third critical factor affecting the price of Bitcoin is the constant capitulation of miners. Miner capitulation refers to a situation where miners, especially those operating with marginal efficiency, start selling their mined Bitcoin to cover operating costs due to unprofitability. This phase can put significant downward pressure on Bitcoin prices because it increases the supply of Bitcoin being sold in the market.
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like mentioned By NewsBTC, famous cryptocurrency analyst Willy Wu and others pointed out that miners capitulating is a crucial stage to watch, especially after… Bitcoin halving Events that reduce miners’ rewards by half, straining their profitability. Wu recently noted that recovery from such concessions has historically been slow and closely tied to the return of mining activity and hash rates.
Crypto expert Jilly, speaking via X, Highlight The ongoing nature of this capitulation today, saying: “Hash Ribbons shows that the capitulation of miners is continuing – which is exactly what you want to see after the halving. Generally speaking, the market starts to rise once the capitulation phase is over.”
At press time, Bitcoin was trading at $61,241.
Featured image from iStock, chart from TradingView.com
