In the past 7 days, the price of Bitcoin has dropped by over 11%, hovering around $54,250 at the time of writing, with a 24% drop in just the past 5.5 hours.
Here are the main factors behind the decline:
German government selling
The decision of the German government to start liquidating its own Bitcoin holdings has affected market sentiments, with transactions observed towards some of the largest exchanges such as Kraken, Bitstamp, and Coinbase.
In the last two weeks, the government has slowed down its holdings from 50,000 BTC to 41,774 BTC as of July 5.
Read more:
German politicians urge government to stop selling Bitcoin
Miners’ capitulation
Following the recent Bitcoin halving event that occurred in April 2024, reducing mining rewards from 6.25 to 3.125 BTC, increased economic pressure on miners. This reduction was expected to drive up the price of Bitcoin significantly, but it did not happen, leaving miners with decreasing returns.
According to analysts from CryptoQuant, the current miner capitulation resembles previous market bottoms, such as that following the FTX crash. Indicators of miners’ dire situation include a 7.7% drop in hash rate and mining revenue dropping to nearly historic lows, forcing many to shut down their equipment and sell their BTC holdings.
Payout of funds owed from Mt. Gox hacks
Plans to distribute 142,000 BTC from the now-defunct Mt. Gox exchange raised significant market concerns. This amount, nearly 0.7% of Bitcoin’s total supply, will be distributed among the exchange’s creditors, following its closure in 2014 after a massive hack.
After reports earlier today that the rehabilitation trustee had moved $2.7 billion in preparation for upcoming payouts, the price of Bitcoin
fell
to $54,000.
Read more:
What will investors do with Mt. Gox’s funds?
Slowdown in spot Bitcoin ETF activity in the U.S.
Contrary to expectations of a market boost from institutional investments through spot Bitcoin ETFs, there has been a noticeable slowdown in this sector. The anticipated “second wave” of institutional money has yet to materialize, leading to reduced activity in the exchange-traded funds space.
The enthusiasm for Bitcoin ETFs has failed to counter prevailing negative market sentiments. Nevertheless, their direct impact remains relatively weak. Analyst James Chek, known as the ”
death cross,” recently
calculated
that only 20% of spot volume is attributable to these ETFs, with the rest coming from traditional spot markets.
