Bitcoin price drops as investors 'sell the news' on Mt. Gox repayment announcement, analyst says

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The Block2024/06/24 17:32

By:Brian McGleenon

Bitcoin is trading at a low not seen since mid-May, nearly 20% below its all-time high reached on March 14.The move lower comes as Mt. Gox announced plans to distribute bitcoin and bitcoin cash repayments from July, according to the Rehabilitation Trustee.

Bitcoin BTC -6.35% 's price suffered a pullback on Monday, dropping over 5% in daily trading following Mt. Gox's announcement to distribute $9 billion in bitcoin and bitcoin cash repayments starting in early July. The price of the world's largest digital asset by market cap has slipped close to the $60,000 mark, its lowest level in almost six weeks.

Bitcoin's move lower comes as defunct bitcoin exchange Mt. Gox is set to start distributing bitcoin and bitcoin cash repayments in July, according to a notice sent by Rehabilitation Trustee Nobuaki Kobayashi on Monday.

Bitget Research analyst Ryan Lee told The Block Mt. Gox's repayment announcement is "a classic 'sell the news' scenario."

"The repayment in bitcoin is causing market worries about the influx of supply, and it's likely that beneficiaries will sell their coins to capitalize on the significant gains made over the last decade," Lee added.

The analyst added that although the proposed $9 billion repayment is substantial, it is coming up against several factors that can contribute to bitcoin’s resilience.

"In the macro environment, the Fed Net Liquidity Index has topped $6.5 trillion, releasing $400 billion of liquidity in the market, reaching a 24-month peak level. Combined with likely rate cuts, bitcoin has the advantage and the potential to resist any negative impact of the Mt. Gox selloff," Lee said.

Investors taking risk-off approach to bitcoin

According to Stocklytics analyst Neil Roarty, "Bears are arguing that there has been a fundamental shift in both market and mood, pointing to how bitcoin no longer appears to be tracking with the Nasdaq, which soared to record highs last week."

Roarty told The Block this is happening in tandem with rumors that whales, including some of the biggest miners and even the German government , are offloading their holdings. He added that if the negative sentiment prevails, bears have already highlighted the symbolic $50,000 mark as a near-term possibility.

"The bulls will have to console themselves with the knowledge that, as always in crypto , fortunes can reverse extremely quickly," Roarty said.

This forecast comes after CryptoQuant analysts said bitcoin is trading below a critical support level. "Falling under this threshold suggests a potential 8%-12% correction toward $60,000," CryptoQuant wrote in an X post. A decline below the $60,000 mark would be a significant drop, falling to a level not seen since May 3, when bitcoin was trading around $59,000.

Bitcoin changed hands at around $60,149 at the time of writing, having fallen 5.7% in the past 24 hours, according to The Block’s price page . The price of ether has also dipped over 6% to $3,345 in the same period. The global cryptocurrency market cap today is $2.33 trillion, dropping 5% in the last 24 hours, according to Coingecko data .

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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