Bitcoin is poised for its worst weekly decline in over a year

Bitcoin is facing its steepest weekly decline in over a year, driven by fears of liquidation. Traders are concerned about the potential mass sell-off of tokens from the defunct Japanese exchange Mt. Gox and additional sales by leveraged players following Bitcoin’s recent strong performance.

The price of Bitcoin, the world’s largest cryptocurrency, dropped by as much as 8 percent in a single day to $53,523, marking its lowest level since late February. It is on track for a weekly decline of more than 12 percent, the largest since early November 2022.


Ethereum, another leading cryptocurrency, also suffered a significant drop, falling 9 percent to $2,841, its lowest in over two months. Reports indicate that Mt. Gox, once the top exchange for cryptocurrencies before its collapse a decade ago, may soon begin returning Bitcoin to its creditors. These creditors, who obtained Bitcoin when it was worth only a few hundred dollars in 2014, are likely to sell their tokens, adding further downward pressure on the market.

Tony Sycamore, a market analyst at IG, noted that the ongoing selling pressure is linked to the anticipated sell-off by Mt. Gox creditors. He suggested that the market's accelerated decline reflects efforts to preempt the expected influx of Bitcoin from these creditors.

Adding to the uncertainty are concerns that President Joe Biden could be replaced as the Democratic presidential nominee by someone less supportive of cryptocurrencies, following a shaky debate performance against rival candidate Donald Trump.

Antoni Trenchev, co-founder of crypto platform Nexo, pointed out that the current slide in Bitcoin prices is happening even as US stocks and global equity indexes are near record highs. This divergence indicates a weakening correlation between Bitcoin and mainstream equities.

Bitcoin started the year strong, reaching a record $73,803.25 in mid-March following the launch of exchange-traded funds in the US. However, it has struggled since then. Justin D’Anethan of digital assets market maker Keyrock noted that with Bitcoin having been rangebound for some time and recently at the lower end of that range, there are many margined positions. This creates a cascading effect, pushing prices down further in a highly leveraged market.

Posted on 07-Jul-2024