Why is $BTC dumping?
This is the result of combined many factors
Mt. Gox, ETFs, halving, Germany, and much more
I've prepared a full analysis of the current situation
Over the past week, Bitcoin has dropped from $71k to $57k, a decline of around 20%, something we haven't seen in a long time.
Today, we'll try to understand why this is happening and what the prospects for BTC are.
Let's dive in
1/ Mt. Gox
This cryptocurrency exchange collapsed in 2014 due to a hacking attack.
Late last month, news emerged that Mt. Gox is ready to repay its creditors.
The exchange's representatives will distribute 142,000 BTC (0.68% of total supply) among its clients.
Many fear that creditors will decide to sell the received Bitcoins.
Given the amount of BTC they will have, this will undoubtedly impact the market.
Moreover, the mere fear that this might happen is causing many to sell their assets.
But that's not all
2/ BTC ETF
Spot Bitcoin ETFs have made the cryptocurrency's price more dependent on the sentiments of large investors.
Currently, BTC ETFs hold 5% of Bitcoin's total supply.
At the beginning of this month, there was a renewed outflow from ETFs, and these changes are also putting pressure on the cryptocurrency's price.
3/ Miners
On April 20, 2024, was halving occurred, reducing miners' rewards from 6.25 to 3.125 BTC per block.
For miners to remain interested in their work, a rise in BTC price was necessary, and many were expecting this.
However, it didn’t happen, and many miners are now forced to sell their BTC.
4/ U.S. Interest Rates
The lower the interest rate, the more attractive high-risk investments (such as crypto)
The minutes from the FRS meeting showed that policymakers are unwilling to lower rates until there is more data indicating that inflation is moving toward the target rate of 2%
5/ Germany
The German government owns a significant amount of BTCand has started selling its assets.
According to Arkham, the German government recently transferred 400 BTC to the exchanges Bitstamp, Coinbase, and Kraken.
In total, 2,700 $BTC have been moved to exchanges from the government's wallet over the past two weeks.
All these reasons combined lead to the current situation we are witnessing.
However, there's always another side to the story.
Bitcoin has some support factors, let's discuss it in detail in the next article
