Recent market mood in the world of cryptocurrencies has fallen to an all-time low, reflecting depths not seen since January 2023. Glassnode observed a sharp decline in the Crypto Fear & Greed Index as of July 9, which measures market sentiment, to 27.
A number of factors, such as significant sell-offs by the German government and repayments to creditors by the now-defunct Mt. Gox, have contributed to Bitcoin’s decrease.
Recent Market Sentiment and Historical Context
The index was slightly lower at 26 in January 2023, not long after the cryptocurrency exchange FTX collapsed. At this time, the price of Bitcoin was roughly $16,500. However, as the month came to a conclusion, TradingView data showed that Bitcoin had recovered and was trading at about $22,000.
The start of Mt. Gox’s repayment process and the German government’s intention to sell off its Bitcoin assets have increased market anxieties.
According to data from Arkham Intelligence, the government has been methodically dumping Bitcoin, lately transferring an extra $276 million worth of the cryptocurrency into its selling wallet. Approximately 22,800 Bitcoin are still in official hands.
Source: Glassnode
With $8.2 billion in Bitcoin, Mt. Gox has started the repayment process, giving around $9 billion to creditors. It is expected that this sizeable payback will put additional downward pressure on the price of Bitcoin because creditors might decide to liquidate their recently reimbursed holdings.
Due to these circumstances, the value of Bitcoin dropped from over $63,000 at the end of June to $53,570 by July 5.
There are indications of market resiliency in spite of these pressures. Since 2021, the quantity of Bitcoin kept on exchanges has been tracked by the Bitcoin Exchange Reserve, which has been steadily declining and has now reached a multi-year low.
This decrease in the quantity of Bitcoin that is available on exchanges can be a reaction to the urge to sell. Furthermore, indicators such as the Miner Supply Ratio and the Miners Position Index imply that miners’ reserves are running low, which may limit additional selling by this industry.
Investor and Mining Sector Activity
Additionally, investors have bought into Bitcoin funds amid the recent decline, demonstrating the funds’ outstanding performance. The largest weekly inflow of Bitcoin funds in more than a month was demonstrated by this activity.
In terms of mining, the industry is adjusting to the recent halving that occurred in April by expanding its sources of income and increasing hashrate through well-timed collaborations, mergers, and acquisitions.
CleanSpark, for example, recently announced the acquisition of five mining facilities in Georgia for $25.8 million. This transaction is expected to increase the processing power of the facilities by over 3.7 exahashes per second, with a combined power output of 8 to 15 megawatts, or 60 megawatts.
Public Bitcoin mining companies raised $2 billion in equity funding ahead of the revenue reduction caused by the halving. Leaders like CleanSpark, Riot Platforms, and Marathon Digital have strengthened their financial positions; as of the end of March, they had significant Bitcoin reserves and had over $1.33 billion in cash.
According to CryptoQuant, despite these efforts, miner revenues have decreased by 63% after the halving. However, Bitcoin has recently seen a surge, trading at $57,683, up 3.3% from the previous day and up 28.1% from the beginning of the year.
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