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Bitcoin has enjoyed an impressive year, with prices rising from $44,000 at the start of the year to test $70,000 resistance on several occasions thanks to the successful launch of spot ETFs and a maturing market. However, June has been a difficult month for Bitcoin bulls. The BTC price, which started at $68,000 and once again tested $70,000 on June 5th, has retreated to test $60,000 support.
According to analysts, if support breaks, investors can expect prices to fall back to around $50,000 before a possible bullish break upwards. Some of the retraction is likely to be a correction for increases earlier in the year, but it is also fuelled by an impending selloff of Mt. Gox holdings, as well as the German government moving millions of dollars of seized Bitcoins to exchanges.
Summary
Still the Must-Have Crypto
While all this unfolds, demand for Tether is also down, suggesting there is reduced interest in cryptocurrency at this time. Since it suffers from less volatility than altcoins, and because the price has corrected before another possible attempt to take $70,000 resistance, Bitcoin is still seen as the best crypto to buy now for long-term returns.
According to Kane Pepi, between well-established assets like Ether and promising ones like PlayDoge, there is a high potential for returns among such coins. However, some analysts also believe Bitcoin prices could go as high as $1 million after the next halving event, set to take place in 2028. While a 1,500% increase seems unlikely, such increases have been seen during previous mega bull runs and halving events.
Impending Mt. Gox Selloff
On June 24, trustees for the now-bankrupt Mt. Gox exchange said they would start distributing Bitcoin to creditors in the first week of July. Approximately 140,000 Bitcoins are expected to be moved, with 65,000 being sent to individual creditors and around 30,000 going to funds and other groups.
While this does represent a major movement of Bitcoins, some commentators do not expect it to have too much impact on the market. They claim that many of the recipients will continue to hold the crypto, which means it represents a transfer of Bitcoin and not a sale. Others have also pointed to the fact that some creditors will have already sold their bankruptcy claims to investors hoping to hold Bitcoin for the long term. However, some sales are likely as recipients look to liquidate assets that have effectively been unobtainable for the past 10 years.
Mt. Gox History
Mt. Gox was the world’s largest cryptocurrency exchange but, in 2014, following a possible major hack of the exchange’s accounts, it filed for bankruptcy, with many other tantalizing details from the inside story. Hackers got away with nearly three-quarters of a million Bitcoins. Around 200,000 of the coins were later recovered, and trustees have been holding them in preparation to repay creditors.
Since the hack, Mt. Gox has been hanging over the cryptocurrency market’s head. News of potential sell-offs has, in the past, caused considerable drops in the market. As such, any possible sell-off may already be accounted for in Bitcoin prices.
German Government Selloff
Another possible reason for Bitcoin’s recent price struggles is the news that the German government is in the process of selling off cryptocurrency it has seized from criminal groups. It is rumored that the majority of the seized coins were taken from the pirate movie website, Movie2k.
Reportedly, a single wallet belonging to the German government has sold more than $50 million of its holdings already, using the Coinbase and Kraken exchanges, although 500BTC was sent to an unknown wallet address, known only as 139Po. The wallet now holds 46,539 Bitcoins, worth nearly $3 billion.
If the wallet is to be used for the sale of Bitcoins, it could represent massive selling pressure on the market in the coming days and weeks.
Tether Demand Down
During the bull run earlier this year, Tether demand was increasing at around 5% per month, suggesting more money entering the crypto market. Tether is tied to the value of the dollar. Also, as a popular choice as a payment method in anonymous casinos and other industries like the food and beverage sector and some major E-commerce sites that accept crypto, it is commonly used by traders when new money enters the market. It retains value while investors look for the ideal jumping-on point.
Reports suggest that demand has slowed, only increasing by 1.5% in June, which means a lot less new money is coming into the crypto market. Less liquidity means downward pressure on Bitcoin, as well as other major coins like Ethereum.
Price Corrections
More than half a billion dollars left the market in the week beginning June 17th. Part of the reason for this mass exodus is likely to be profit-taking. At the beginning of February, Bitcoin was trading at $43,000. By the beginning of March, the price had risen more than 40% to $62,000 and even reached as high as $73,000 by the middle of March.
However, several failed attempts to take and hold above $70,000 have seen momentum slowly dwindle and since June 6, prices have slowly fallen back in line. Some analysts are pointing to Bitcoin having painted a double-top pattern formation, with strong indications that the price could drop to $50,000 and possibly even as low as $45,000 as a result of further correction.
The same analysts also point to bullish sentiment later in the year, as a result of the U.S. election and inflation measures.
Options Expiries To End In The Money
There is some potentially bullish news for Bitcoin investors just around the corner, however. Over $6.5 billion of Bitcoin options expire on June 28, with a quarter set to expire in the money. This means that a lot of contracts will prove profitable for holders. Furthermore, as the price continues to drop, potential investors might see an opportunity for buy-in and take advantage of potential rises later in the year.
As well as the upcoming Presidential elections, some investors hold out hope of a post-halving boost. April’s halving was the third of its kind since Bitcoin launched. With the two previous halvings, prices rose steeply within 12 months of the event taking place.
It is worth noting that only two halvings do not represent a significant trend, and it is likely that traders and investors who believe it will happen have already bought into the price rise. A price bump may occur at the start of next year, but it isn’t likely to be as pronounced as previous bull runs.
Previously, news of Mt. Gox and substantial government sell-offs would have caused significant volatility in Bitcoin prices. While prices are slowly slipping down, the crypto market, as a whole, looks a lot more robust. Analysts are pointing to this as being a sign of maturation for the market.
Conclusion
The previous bull run of 2022 saw a market volatility of more than 100%, while the bull run earlier this year only saw volatility rates reach around 50% and the current market volatility is set at around 40%. This may mean less opportunity for the significant price increases of the past, but it also suggests less risk of sudden and significant price drops. This reduced volatility is likely a result of greater acceptance, especially thanks to Bitcoin spot ETFs, and the impending launch of similar products for Ether.
*This article was paid for. Cryptonomist did not write the article or test the platform.
