Bitcoin has experienced a sharp decline amid fears of Mt. Gox repayments and speculations about Federal Reserve rate cuts. Here’s what happened and what could be next for BTC.
Bitcoin Plunges Below $60,000 Amid Mt. Gox Repayment Fears
On Wednesday, July 3, Bitcoin (BTC) dropped by 3.04%, closing at $60,216. This followed a 1.25% decline on Tuesday, July 2. The latest price movements reflect adverse supply and demand dynamics affecting Bitcoin since early June.
The Mt. Gox Effect
Mt. Gox’s plan to repay creditors approximately $9 billion in BTC is causing jitters in the market. The exchange, which collapsed in February 2014, is set to return about 141,000 BTC to creditors. While this amounted to around $70 million at the time of the collapse, the current value of these BTC is approximately $8.5 billion. The market anticipates that many creditors will sell their BTC, contributing to the recent price pullback.
For context, the US BTC-spot ETF market has seen total net inflows of $14.62 billion since its launch on January 11.
US Economic Indicators and Fed Rate Speculations
On Wednesday, US labor market data influenced investor expectations for a September Fed rate cut. Continuing jobless claims rose from 1,832k to 1,858k for the week ending June 22, the highest level since November 2021. Additionally, the ADP reported a 150k increase in employment in June, lower than the expected 160k rise and the lowest increase since January 2024.
These indicators led investors to increase their bets on a September Fed rate cut. According to the CME FedWatch Tool, the probability of the Fed holding interest rates unchanged in September fell from 31.2% to 26.5% on Wednesday. However, these developments were not enough to counter the impact of the Mt. Gox news on Bitcoin prices.
US BTC-Spot ETF Market Faces Net Outflows
The US BTC-spot ETF market saw net outflows of $13.7 million on Tuesday, July 2, ending a five-day inflow streak. On Wednesday, July 3, the market experienced further net outflows. Grayscale Bitcoin Trust (GBTC) reported net outflows of $27.0 million, while Fidelity Wise Origin Bitcoin Fund (FBTC) saw net inflows of $6.5 million. Excluding iShares Bitcoin Trust (IBIT), the total net outflows amounted to $20.5 million.
Technical Analysis
Bitcoin Analysis:
BTC remains below the 50-day EMA but above the 200-day EMA.
A move above the $64,000 resistance level could signal a bullish run towards the 50-day EMA and possibly the $69,000 resistance level.
A break below the $60,365 support level could lead to further declines towards the 200-day EMA.
Ethereum Analysis:
ETH is below the 50-day EMA but above the 200-day EMA.
Breaking above the $3,480 resistance level could push ETH towards $3,600.
Falling below the $3,244 support level might result in a drop towards the 200-day EMA and the $3,033 support level.
Conclusion
Bitcoin’s recent plunge below $60,000 has been influenced by concerns over Mt. Gox repayments and Fed rate cut speculations. Investors should stay informed and monitor real-time data, expert commentary, and market trends to navigate the volatile crypto landscape effectively.