The recent Bitcoin price crash: is it worth worrying about?

In early July 2024, after recording a significant decline, the price of Bitcoin fell to its lowest level since late February. This fall to a low of $53,600 on 5 July was mainly due to the fact that the Mt. Gox transferred a large amount of BTC to a new wallet, possibly to pay off creditors. There were fears that the creditors would sell the coins as soon as they received them, resulting in huge selling pressure in the market. The broader digital asset market also felt the heat, with the CoinDesk 20 index down around 6%.

Nevertheless, these events have since been overshadowed by a bounce in the Bitcoin price above $62 000, indicating a bull run. The price of BTC is currently above $64 000, indicating that the market is slowly stabilising.

At Bintense, we believe that you should be well aware of all market developments before buying and selling cryptocurrencies. Let’s discuss this recent event and its impact.

What caused Bitcoin’s price to plummet?

The recent fall in the price of bitcoin can be attributed to several factors:

“Mt. Gox return. Gox is expected to return 140,000 BTC, which is equivalent to approximately $7.3 billion. The expectation that these coins will be sold on receipt has led to volatility and selling pressure.

Liquidation by the German government: the continued liquidation of BTC by the German government has also contributed to selling pressure in the market. This liquidation was massive, causing market volatility.

Bitcoin Miner capitulation: miners are unloading more BTC than usual due to low revenues after the recent halving cycle. This sell-off is necessary to cover their operating costs.

Stablecoin issuance has stalled: circulation of USDT and USDC stablecoins is down, so no new capital is entering the market.

Record long liquidation: long BTC positions are liquidated in record numbers, causing the price to drop due to automatic selling to cover losses.

ETF outflows: another factor is the outflows from bitcoin spot ETFs. This means that a large number of bitcoins are being sold to meet investor redemptions, which brings more bitcoins into the market and drives down the price.

Why you should not worry

The recent fall in the price of Bitcoin may be worrying, but it is important to note that such fluctuations in Bitcoin have often happened before. These fluctuations are sometimes part of the cyclical processes of the rise and fall of this cryptocurrency. Here are a few reasons why you should not be too worried:

• Historical cycles: bitcoin has experienced a series of downturns and subsequent upturns in recent years. Such cycles are inevitable in its long-term growth. After hitting new lows, bitcoin bounces back and starts to rise again.
• Market recovery: after dropping to almost $50,000, bitcoin started to climb up, recovering above $62,000. This rebound shows that the market is recovering and slowly regaining confidence.
• “Bullish Momentum: Experts believe that the BTC/USD pair will continue its uptrend. For example, renowned cryptocurrency analyst Rekt Capital has pointed out that a new wave of bitcoin growth could start soon, reaching up to $71 000 per coin.

Bigger picture

It is important to put the current decline in bitcoin prices in the broader context of the functioning of the single market. Price volatility is driven by market sentiment, regulatory action and macroeconomic factors. Nevertheless, the future of Bitcoin is promising and many analysts expect the price to continue to rise over time.

To summarise, while the recent fall in the price of Bitcoin may seem alarming, it is a common occurrence in the cryptocurrency market. In order to cope with these market changes, it is essential to use reliable sources such as our Bintense to purchase Bitcoin and increase your cryptocurrency options.

Refusal to take risks:

“Bintense does not act as a financial advisor, nor does it provide investment advice or recommendations. We may provide information about the price, range, volatility and events that have affected the price of a digital currency, but this does not constitute investment advice and should not be interpreted as such. Any decision to buy or sell Digital Currency is made solely at your own risk and Bintense shall not be liable for any losses incurred.