The cryptocurrency market saw a dramatic downturn on Thursday as Bitcoin plummeted below $58,000, triggering a frenzy of liquidation across the crypto market.
This drop came after reports from crypto analytics firm Lookonchain indicated that a Bitcoin wallet associated with Germany’s Federal Criminal Police Office (BKA) had initiated transfers totaling 3,000 BTC (worth around $173 million) to major exchanges, including Coinbase, Kraken, and Bitstamp.
This development follows a series of transfers initiated on June 19, 2024. On Wednesday, July 2nd, the BAK moved 282.74 BTC (worth approximately $17.6 million) to exchanges before sending an additional 361.8 BTC (worth around $22.65 million) to the market maker Flow Traders within hours. Over the past month, transfers from German government wallets to CEXCoins have totaled approximately $552 million, with the government now holding 40,359 BTC, which is worth approximately $2.33 billion.
Notably, the origins of these funds trace back to January, when German authorities seized a total of 50,000 BTC from the administrators of Movie2k, a notorious piracy platform. The recent transfers form part of an ongoing process initiated on June 19th aimed at liquidating these assets.
Amid this pressure, concerns have also arisen over a potential dump of approximately $9.4 billion BTC by Mt. Gox creditors. This week, the cryptocurrency community has been raising alarms upon detecting movement in wallets linked to the now-defunct exchange, suggesting the distribution could come early this month.
That said, amid this week’s developments, experts have cautioned investors, convinced these events could continue to influence Bitcoin’s price decline.
In a tweet, analysts from Intotheblock cautioned that Bitcoin’s breach below the $60,000 support level could indicate sustained downward pressure, possibly pushing prices toward $50,000 or $40,000. Notably, approximately 16% of Bitcoin holders are currently experiencing losses.
Elsewhere, Andrew Kang of Mechanism Capital also foresees Bitcoin potentially dropping to $40,000. In a Wednesday tweet, Kang drew parallels with Bitcoin’s exit from a similar range in May 2021 following a parabolic rally, noting significant leverage accumulation exceeding $50 billion. He suggests that the market’s prolonged stability and absence of significant squeezes, unlike historical events three years ago, could lead to a more severe correction.
“Initial estimates around $50,000 may have been conservative, with a more drastic pullback to $40,000 seeming increasingly probable. Such a correction could have a profound impact on the market, potentially necessitating several months of recovery before an uptrend resumes,” wrote Kang.
However, despite these warnings, experts from Cryptoquant have argued that selling pressure, earlier attributed to Bitcoin miners, is subsiding, which signals that the BTC price is about to bottom.
Bitcoin was trading at $57,379 at press time, reflecting a 4.43% decline over the past 24 hours. During the same period, the entire crypto market capitalization also declined by approximately 4% and currently stands at $2.13 trillion.
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