Bitcoin price today fell below the psychologically significant level of $60,000, as multiple factors, including profit-taking and miner selling, weighed on the digital currency.
According to Coinbase data provided by TradingView , the world's most valuable cryptocurrency by total market value fell to nearly $58,400 at around 4:30 pm EST. At this time, the digital asset is trading at its lowest value since early May.
When asked to explain this latest drop, analysts cited a variety of factors, including traders exiting their positions to take profits and miners selling their crypto to shore up their profits.
“It could come from long-term investors taking some profits and from miners becoming unprofitable after the halving of their treasury holdings,” Sam Callahan, senior analyst at bitcoin financial services firm Swan Bitcoin, said via email.
Mt.Gox Announcement
Another variable that market observers are mentioning is the recent announcement that the now-defunct exchange Mt. Gox will soon begin refunding assets that were lost years ago when the market was hacked.
Many see this development as a headwind for bitcoin prices, according to market participants cited in a CoinDesk article.
“The refunds are largely seen as adding selling pressure to the bitcoin (BTC) market as early investors will receive the asset at a much higher value than their pre-2013 entries, making them more inclined to sell at least a portion of their holdings,” the traders said.
While news that Mt. Gox would begin refunding cryptocurrency made widespread news, analysts probing the article gave mixed answers about its actual impact on bitcoin prices.
Some believe this is what is driving the cryptocurrency down. Joe DiPasquale, CEO of crypto hedge fund manager BitBull Capital, is in this camp.
“We believe the news that Mt. Gox has begun returning BTC to victims is part of the downward pressure on Bitcoin,” he said via email, adding that “We are also closely monitoring sentiment analysis, as profit taking from cryptocurrencies has become a more common phenomenon.”
Tim Enneking, managing partner of Psalion, also weighed in.
“The Mt. Gox news amid an already weak market is clearly the cause of today’s decline,” he said via email.
“Once the decline starts, profit-taking begins, long positions are liquidated voluntarily or involuntarily (in case of leverage) and losses mount rapidly,” he said.
Others, however, take a more skeptical view on the subject.
“The impact on Bitcoin price from Mt. Gox’s distribution of Bitcoin may be overstated,” Callahan said.
Brett Munster, portfolio manager at Blockforce Capital, also expressed his doubts in emailed comments.
“I think the concerns around the Mt Gox announcement were overblown,” he said.
“Yes, that is true based on recent reports that Mt Gox will begin distributing bitcoin in July,” Munster noted.
“The false assumption many are making is that all of those bitcoins are being redistributed to the retail customers who originally purchased them. Because the coins are worth more, many retail investors will sell when they receive their bitcoins (or so the theory goes),” he said.
However, “anyone who has followed the Mt. Gox story closely knows that is not the case,” Munster said.
“The reality is that there has been a very active secondary market for Mt. Gox claims over the past few years,” he noted, adding that “There are a number of large institutions that have accumulated a significant portion of those claims.”
“Therefore, less bitcoin is going back to retail investors than most people realize and more is going to sophisticated, long-term investors who are unlikely to sell bitcoin when they receive it,” a development that should reduce the impact these movements have on the price of the cryptocurrency.
Enneking also offers some additional nuances on this topic.
“The interesting thing about the Gox news is that anyone who wanted to sell their Gox BTC did so long ago – for traders who were willing to play the long game and wait for the Gox recovery trustee (bankruptcy administrator) to actually distribute,” he said.
“Those who want to sell and those who hold now are almost certainly smart enough – and patient enough – to realize that selling immediately after distribution is the worst thing they can do.”
“Wait a few months or a quarter at most, and they will be able to sell with at least a ‘7’ handle, compared to the current ‘5’ handle.”
