The cryptocurrency market experienced a significant downturn as the price of Bitcoin fell by almost 4% in the past 24 hours. Bitcoin, the leading digital asset, dropped below $59,000, trading at $58,770 at the time of writing. This decline also impacted other major cryptocurrencies such as Ether and Solana, which decreased by 4.6% and 7.3% respectively. The global cryptocurrency market cap saw a 4.1% decrease, standing at $2.28 trillion, according to Coingecko data.
One of the factors contributing to the recent drop in Bitcoin’s price is the spike in long liquidations. Futures traders who were betting on the price of Bitcoin and other cryptocurrencies to increase suffered losses of over $240 million in the past 24 hours. Bitcoin futures alone accounted for more than $61 million in long liquidations, while the overall cryptocurrency market recorded over $247 million in long liquidations. Long liquidations occur when investors holding long positions in financial instruments like Bitcoin are forced to sell their positions due to margin requirements not being met in leveraged trading.
The market has also been affected by various sell-pressure factors, including the announcement that Mt. Gox creditors will start receiving repayments totaling approximately 142,000 Bitcoin. This news has raised concerns that creditors may start selling their Bitcoin holdings after waiting for over a decade to receive them. Additionally, a large transfer of 1,723 Bitcoin worth over $168 million to Binance suggests that some entities may be looking to secure profits by selling their holdings.
Institutional inflows to US-based spot Bitcoin exchange-traded funds (ETFs) have helped offset some of the selling pressure. These ETFs have accumulated over $52.5 billion in Bitcoin since their launch in January. However, spot Bitcoin ETFs in the US experienced a total daily net outflow of $20.45 million on Wednesday, with only two funds recording net inflows.
Another development adding to the selling pressure is the German government’s transfer of seized Bitcoin to cryptocurrency exchanges like Kraken and Coinbase. These transfers, totaling $24 million, are believed to be linked to the seizure of nearly 50,000 Bitcoin from a film piracy website in 2013. The movement of significant amounts of Bitcoin to exchanges could potentially lead to further downside pressure on the digital asset.
Overall, the cryptocurrency market is currently facing a combination of factors that are contributing to the downward trend in prices. Investors are closely monitoring developments such as Mt. Gox repayments, institutional inflows, and government seizures to gauge the future direction of Bitcoin and other cryptocurrencies.
