In a significant market downturn, the Bitcoin price has fallen below the $57,000 mark, reaching a low of $56,950 in early European trading hours on Thursday.
This price point has not been this low since early May and represents a drop below the crucial 200-day moving average of $58,492.
The world's largest cryptocurrency by market capitalization has now experienced a three-day decline, raising concerns among investors and analysts alike.
The sudden price drop can be attributed to several factors, according to market experts.
One notable development is the German government's transfer of approximately 1,300 BTC, valued at $75.53 million, to major cryptocurrency exchanges Bitstamp, Coinbase, and Kraken.
This transaction, reported by blockchain analytics firm Arkham, marks the largest transfer to centralized exchanges in recent times and has likely contributed to increased selling pressure.
Adding to the market uncertainty are the anticipated Mt. Gox repayments, which are expected to commence in early July. According to data from Arkham Intelligence, several wallets linked to Mt. Gox made minor Bitcoin transfers earlier today. It's the first time they've been active in a week.
Part of the Bitcoin was sent to a wallet identified by Arkham as belonging to Bitbank, one of the exchanges selected to manage Mt. Gox creditor repayments. Arkham Intelligence detailed that these transactions involved three wallets connected to the defunct exchange, with the largest transfer being approximately $24.
This is believed to be a test transaction in preparation for the substantial customer repayments scheduled for this month.
This long-awaited distribution will see over $9.4 billion worth of Bitcoin returned to approximately 127,000 creditors who have been awaiting reimbursement for over a decade.
The influx of such a significant amount of Bitcoin into circulation could exert further downward pressure on the market.
The price decline has also triggered a wave of liquidations in the derivatives market.
According to data from CoinGlass, Bitcoin liquidations have reached $100.4 million, with over $86 million worth of leveraged long positions being forcibly closed.
According to 10x Research, $60,000 was a key level for Bitcoin miners and Bitcoin Spot ETF buyers, and it also broadly marked the bottom of the three-month trading range.
“Only ill-informed traders are willing to buy here. Breaking this support could cause a sharp decline to the low $50,000s,” the report stated.
“Unfortunately, many appear to be still very long Bitcoin, while a correction towards $50,000/$55,000 could have offered much better re-entry levels,” it added.
Bitfinex analysts told Decrypt that Bitcoin has decoupled from U.S. equities, while long-term Bitcoin holders—who had paused on any selling in early May—have returned.
“In the meantime, an overhang of supply continues to weigh on the market, with selling possible from Mt. Gox depositors and the Bundeskriminalamt, Germany’s Federal Criminal Police Office, who may be tempted to dispose of their recent Bitcoin windfall,” the analysts stated.
Edited by Stacy Elliott.