Bitcoin has crashed toward $50,000 per bitcoin, diving after Federal Reserve chair Jerome Powell warned of a "critical period." This sharp decline has seen the bitcoin price lose around 25% over the last month. The combined market capitalization of bitcoin, ethereum, XRP, solana, and other cryptocurrencies has approached $2 trillion for the first time since early February, down from nearly $3 trillion in March.
This comes on the heels of a legendary tech billionaire speculating that bitcoin could replace the U.S. dollar. Additionally, the collapsed bitcoin exchange Mt. Gox has begun moving what could be a tidal wave of bitcoin. "On July 5, 2024, the [Mt. Gox] rehabilitation trustee made repayments in bitcoin and bitcoin cash to some of the rehabilitation creditors through a part of the designated cryptocurrency exchanges etc. in accordance with the rehabilitation plan," read a letter posted on the Mt. Gox website. However, the text was quickly removed, sparking further questions and uncertainty.
Despite the bitcoin price crash finding a floor, with the broader crypto market rebounding slightly after its steep sell-off this week, traders and analysts remain fearful. The widely-followed Crypto Fear & Greed Index, created by data site Alternative.me, has dropped to its lowest level since January 2023. This drop came just after the bitcoin price had crashed to $17,000 following the FTX crypto exchange implosion, and it is now teetering on the verge of "extreme fear."
"The crypto market cap has fallen back below $2 trillion, accelerating its decline and losing over 8%, while many altcoins have suffered double-digit losses within the last 24 hours," Alex Kuptsikevich, FxPro senior market analyst, said in emailed comments, calling the bitcoin price crash "terrifying." He added, "Bitcoin's 200-day moving average failed to act as support, and we saw an acceleration in the sell-off after a break below this line," predicting that the ethereum price situation "looks like a pause before a new downward impulse that could take the price back to $2,300."
Rachel Lin, the chief executive of decentralized exchange SynFutures, commented, "The direction of bitcoin in the coming days will be determined by the selling pressure from Mt. Gox users." She explained, "The market expects most Mt. Gox users to dump their tokens, but we might see a bounce back if the selling is lower than anticipated. On the other hand, if there is enough selling to push the price lower, we might be looking at the $50,000 level soon."
Lin warned that the "crucial levels" for bitcoin and ethereum were $60,000 and $3,350, respectively—both of which have now been "decisively" broken. "As expected, the fall in bitcoin has dragged down all the other assets," Lin said. "Ethereum is down nearly 9% over the week, and most memecoins are down 10% to 20%."