Let's summarize some of the main factors that are currently affecting the market:
Let's talk about the negatives first:
1. Mt. Gox incident, Mt. Gox, a large exchange that was hacked in 2014, has resurfaced. The exchange announced that it will eventually repay 142,000 bitcoins to creditors. This accounts for 0.68% of the total supply.
The general view at present is that creditors will seek to sell. Such a huge amount, if sold, will obviously have a significant impact on the price of BTC. This concern has now spread, causing panic selling by other holders.
2. ETF Spot Bitcoin ETFs make the asset largely influenced by large investors. These ETFs control about 5% of the total supply of BTC. Therefore, ETF fund outflows (such as the fund outflows we saw earlier this month) also put downward pressure on BTC.
3. Miner rewards In late April of this year, we experienced the fourth BTC halving event. Miner rewards were cut from 6.25 BTC per block to 3.125 BTC. A BTC surge was necessary to keep mining profitable. Since that didn’t happen, miners had to sell to stay afloat.
4. US interest rates According to the recent FOMC meeting, the Fed will hold off on a big rate cut until inflation converges to its 2% target. Lower interest rates make riskier investments like cryptocurrencies more attractive. The reverse is also true (which is where we are now).
5. The German government is selling Bitcoin aggressively. Recent Arkham data shows another 400 Bitcoins were moved to Bitstamp, Coinbase, and Kraken. In the past two weeks alone, the government has moved 2,700 Bitcoins to exchanges.
