On July 4, Bitcoin (BTC) dropped 5.75% to around $56,950, its lowest level in two months, pushing its week-to-date returns to -10.75%. The German government’s Bitcoin transfers to exchanges and Mt. Gox’s plans to repay creditors have played a major role in this decline.
German government is dumping its Bitcoin holdings
Today's Bitcoin price drop appears against the backdrop of the German government's transfers of $172 million worth of Bitcoin to crypto exchanges.
Notably, on July 4, a crypto wallet linked to the German government transferred 1,300 BTC to Coinbase, Kraken, and Bitstamp, according to blockchain investigator PeckShieldAlert. The same wallet sent an additional 1,700 BTC to a different address.
In the past two weeks, the German government has transferred over 3,000 BTC to multiple exchanges, indicating its intention to sell these assets.
Before the first transfer, the wallet held nearly 50,000 BTC since February 2024. These funds are believed to have been seized from the pirate movie website operator Movie2k. The influx of Bitcoin into the market has contributed to increased selling pressure, causing the BTC price to decline by approximately 15%.
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The large volume of Bitcoin entering exchanges often signals potential sell-offs, leading to decreased market confidence and pressuring BTC price lower in recent days.
Mt. Gox inches closer to 140K BTC reimbursement
Today's Bitcoin price decline is further exacerbated by signs that Mt. Gox is moving closer to reimbursing its creditors with over 140,000 BTC, worth approximately $8.5 billion.
According to data from Arkham Intelligence, several wallets linked to Mt. Gox made minor Bitcoin transfers earlier today, marking their first activity in a week. Some of the Bitcoin was sent to a wallet belonging to Bitbank, one of the exchanges selected to manage Mt. Gox creditor repayments.
These transactions involved three wallets connected to the defunct exchange, with the largest transfer being approximately $24. As it appears, these transactions could be a test in preparation for the substantial Bitcoin repayments to Mt. Gox's 127,000 creditors in July.
Interestingly, these creditors have been awaiting reimbursement for over a decade, during which BTC's price has surged by more than 10,000%. The fear of this additional Bitcoin supply witnessing selloffs immediately upon entering circulation has exerted downward pressure on the market.
Over $100 million worth of BTC longs liquidated
Bitcoin's price decline today has accelerated further due to the massive liquidations of long positions in the BTC futures market
Notably, the market witnessed over $100 million in long liquidations in the past 24 hours, compared to $15.45 million in short liquidations. Long liquidations occur when traders are forced to sell their assets to exit their long positions, which increases the selling pressure in an already bearish market.
Interestingly, the wipeout of long position coincides with a decline in Bitcoin Futures' open interest (OI) and funding rates. As of July 4, the total number of BTC's open futures contracts were $31.64 billion, down from $33.35 billion a day ago. Meanwhile, its funding rate dipped from 0.21% per week to $0.12% per week.
Related: Bitcoin will crash to $50K, 10x Research warns
The decrease in funding rates and OI suggests that traders are stepping back from taking new risks, reflecting a more cautious market outlook. Once the market absorbs the selling pressure and liquidations, it may enter a stabilization phase with lower volatility.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
