The Bitcoin price plummeted to a four-month low on Friday, experiencing a significant price slump as rumors of an imminent distribution by the defunct crypto exchange Mt Gox intensified selling pressure on the token. Reports of German police transferring around $75 million worth of confiscated crypto from a piracy website onto exchanges also added to the bearish sentiment in the market. Bitcoin witnessed an 8.5% decline in the past 24 hours, hitting $54,092.3 – the lowest level since March, and was down over 11% in the last week. Traders grew nervous as wallets associated with Mt Gox started conducting test transactions, raising concerns about a potential flood of tokens being sold on the market.
In June, Mt Gox’s liquidators announced their plan to start returning Bitcoin stolen during a 2014 hack to clients from early July. Many traders speculated that the recipients of these tokens would likely sell them, considering the exponential rise in Bitcoin’s price over the past decade. This expected influx of selling pressure led to a widespread sell-off of Bitcoin, as investors sought to lock in profits accumulated in 2024. The fear of additional sales by the German police added to the overall market unease.
The broader cryptocurrency market witnessed steep declines alongside Bitcoin, as uncertainties surrounding the U.S. presidential election and potential changes in interest rates influenced negative sentiment towards digital assets. Speculations about President Joe Biden potentially withdrawing as the Democratic candidate for the 2024 elections sparked concerns within the crypto community, especially amid fears that his replacement might hold an even more negative stance towards cryptocurrencies. Moreover, anticipation ahead of a critical U.S. nonfarm payrolls report kept traders cautious towards crypto, despite the weakening dollar and expectations of an interest rate cut in September.
Market Response and Impact on Altcoins
The market downturn extended beyond Bitcoin, with the world’s second-largest token, Ether, declining by 10.5% to $2,902.42. This drop erased all the gains it had accumulated since late May, pushing it to a near two-month low. Other popular altcoins like XRP, SOL, and ADA also experienced significant losses ranging from 7% to 17%, while meme tokens such as SHIB and DOGE saw declines of over 16% each. The overall market sentiment was further dampened by low trading volumes due to the U.S. market holiday on July 4, coupled with a diminishing hype surrounding the approval of a spot Bitcoin exchange-traded fund.
The recent sharp drop in Bitcoin’s price, along with the broader market decline, underscores the vulnerability of the cryptocurrency market to external factors and regulatory uncertainties. Traders and investors are advised to exercise caution and closely monitor market developments to navigate the current challenging environment.