He experienced a new phase of weakness Bitcoin, because it fell for a while n price at, below the $59,000 mark at midnight between Monday and Tuesday (24 -25.06.24), but recovered slightly in the hours that followed. Over the course of the week, however, the largest and oldest digital currency lost nearly 8%.
In particular, analysts mentioned 3 main reasons for the weakness of the Bitcoin cryptocurrency price, according to today’s (25.6.2024) Handesblatt publication.
The first reason is the payment from the Mt.Gox exchange, the second is the speculation about the sale of the German government, and the third is the concern of continued high interest rates. More details:
Reason 1: Payment from the exchange Mt. Gox
Mt Gox used to be the largest crypto exchange in the world, based in Tokyo. It was then “hacked” in 2011 and filed for bankruptcy in 2014.
However, not all coins were stolen. The exchange still has around 140,000 bitcoins, according to data from analytics firm Arkham. This is due to be paid to former customers from July, the industry service Coindesk reports.
Analysts suspect that this will lead to selling pressure in the market, with some investors clearly wanting to get ahead. For comparison: Fidelity’s Bitcoin exchange-traded fund (ETF) has a good 170,000 Bitcoins.
However, concerns about a major price collapse may be unwarranted. Besides, it remains to be seen how many users of Mt. Gox will immediately make their bitcoins available in the market.
The cryptocurrency has grown 140 times since the crypto exchange went bankrupt. The sale will result in high taxes. Many of the creditors of Mt. Gox that is now paid can keep their coins.
Anyone who needs money immediately could have sold their Mt Gox claims to hedge the funds in advance at a discount, said Alex Thorn of crypto investment bank Galaxy. They think of a full payment.
Reason 2: Speculation about selling the German government
According to Arkham analysts, the German government is also putting pressure on the price of Bitcoin. It has sold more than $195 million worth of bitcoins in the past few days, the analytics company announced late last week through messaging service X (formerly Twitter).
Reason 3: Concern about persistently high interest rates
The Fed’s interest rate policy is also likely to put crypto investors in a bad situation. Crypto funds have now recorded outflows worth $1.2 billion in the second week, according to data from asset manager Coinshares.
Coinshares analysts noted an “investor pessimism about the Fed’s rate cut.”
At their most recent meeting in mid-June, central bankers signaled they would cut interest rates just once this year. In March, 3 more rate cuts are expected.
Low interest rates are usually good for risky assets like technology stocks and cryptocurrencies. Now it may take longer to accomplish.
A ray of hope: Ether ETF
Meanwhile, crypto investors are hoping for new momentum in the coming weeks. The US Securities and Exchange Commission will then give the final green light for an ETF on the second largest cryptocurrency, ether. However, unlike the path leading up to the launch of the Bitcoin ETF, Ether has so far failed to rally.
However, Bitcoin and Ether have seen significant gains since the beginning of the year. Bitcoin has gained 37% since early January, while ether is up 42%.