Bitcoin experienced a significant drop, hitting a four-month low of $55,366 on Friday. The cryptocurrency faced its worst weekly performance in a year due to uncertainties surrounding Joe Biden’s potential continuation as the Democrats’ US presidential candidate and concerns about potential increases in crypto supply.
On Friday, Bitcoin prices fell by 5 per cent, reaching $55,366, the lowest since late February, and experienced a 10 per cent decline for the week. Ether also took a hit, sliding 8 per cent to $2,891, marking a one-and-a-half-month low.
Bitcoin started the year strong, bolstered by the launch of exchange-traded funds (ETFs) in the US, which propelled it to an all-time high of $73,803.25 in mid-March. However, since then, Bitcoin has seen a decline of over 21 per cent.
Investors are also fretting about the possibility of Biden being replaced as the Democrats’ presidential nominee by someone who is less pro-crypto, market participants said, after his poor performance in the first debate against Donald Trump.
Analysts also pointed to reports that Mt. Gox, the world’s leading exchange for cryptocurrencies before it went defunct in 2014, is repaying its creditors. That has sparked concern that bitcoin is likely to face further downward pressure if those creditors offload their tokens.
According to CoinSwitch Markets Desk, with 3 major supply overhangs (Mt.Gox, US and German Governments) currently being unloaded on to the BTC markets, the expected selling pressure has brought down prices of the largest crypto asset to levels from six months ago, after breaching the $55k mark earlier today, down over 5%. The broader markets have followed suit with altcoin price getting crushed, and market wide liquidations exceeding $300mm in the last 24 hours.
“The latest drawdown in prices began with the German government moving its largest batch of 3,000 BTC ($175mm), including over $75mmm directly to exchanges. The German government has now sent over $300 million worth of BTC to identified exchange addresses and currently holds 40,359 bitcoin, worth about $2.32 billion. But, the real sell off began in the last few hours after Arkham identified that Mt Gox moved 47,228 BTC ($2.71 billion dollars) from cold storage to a new wallet, which might suggest that the redemption process will soon begin. This has sent shockwaves across the broader markets with Altcoins plunging 10-20% and overall Crypto M.Cap down to $2.1trn,” it added.
Worth highlighting is the sharp drop in Pendle (down 20%), which has lost $3 billion of its TVL with the June expiry as a result of diminishing airdrop farming hype and lower yields amid muted crypto activity, CoinSwitch said
“With BTC prices now falling below the 200-day SMA line for the first time since October 2023, the focus now is on the trendline representing the surge from October lows. Traders will keenly observe any bounce back or further downtrend in prices before taking directional bets,” it added.
(With inputs from agencies)
