In the past 7 days, the value of Bitcoin has dropped by nearly 7.5% and was around $61,000 at the time of writing this article.
This sharp decline coincided with a significant shift in market sentiment.
Fear and greed in the cryptocurrency market decreased from 60 to 48.7 in the past two weeks, transitioning from “greed” to “neutrality”.
Many analysts believe that several major events in the cryptocurrency space have seemingly affected this market trend.
One of the main reasons for the recent price drop is the reduced activity of large investors in Bitcoin, also known as “whales”.
The latest data from Santiment shows a significant decrease in trades worth over $100 million, dropping by 42% in just a few days.
This is significant because a decrease in whale activity usually indicates caution. It may mean that large investors are waiting for further price drops before buying again or that they are avoiding further sell-offs to prevent a rapid decline in price.
When whale activity decreases, it usually signifies that the market is at a crossroads.
Read more:
Analysts predict Bitcoin will face its most severe crash in four years.
Liquidation also played a significant role in driving the recent Bitcoin price drop. The cascading liquidation in the derivatives market contributed to the decline.
When the BTC price started to fall, it triggered a chain reaction in the derivatives market. Coinglass data shows that cryptocurrency positions worth $2.4 billion were liquidated in just 311.9 hours.
Out of these, $277.4 billion were long positions, meaning most of the liquidations affected traders betting on price increases.
While cascading liquidations are not the primary cause of the cryptocurrency price drop, they certainly exacerbated the situation.
Mt. Gox starts paying out Bitcoin to victims of the event
The bankruptcy of the Bitcoin exchange Mt. Gox has created further impact on the market. More than a decade after its collapse, the company announced that it would begin repaying its creditors, which could have an impact on the Bitcoin market.
The exchange stated that payments in Bitcoin and Bitcoin Cash (BCH) will begin in early July.
Mt. Gox holds 141,686 Bitcoins, worth approximately $871 million, in three portfolios.
Concerns arise that many of the creditors may rush to sell their long-awaited Bitcoin tokens. The influx of Bitcoin into the market worries investors about potential sell-offs.
