The Bitcoin price is on a downward trajectory. Over the past month, the cryptocurrency has fallen by 17%, reaching its lowest level since February 2024. Although there has been a slight rebound over the past five days with a gain of 1.33%, this small uptick does not offset the substantial drop seen in recent weeks.
Bitcoin price certainly fell to $53,500 before buying interest was revived, allowing it to re-establish its former support around $56,500. It is currently trading around $57,800 but has fallen below the critical $60,000 mark.
However, the pressing question remains: Will Bitcoin recover to its previous highs or is it destined to fall further, potentially returning to the 2022 lows that wreaked havoc on the cryptocurrency market?
What caused the recent Bitcoin crash?
Currently, two main reasons have led to the fall in the price of Bitcoin. The first is the possible start of the distribution of confiscated Bitcoin from the Tokyo-based cryptocurrency exchange MT. Gox, which collapsed after hackers stole most of its crypto assets between 2011 and 2014.
The second factor affecting the price of Bitcoin is the large-scale sale of Bitcoin by the German government. For several weeks, the German government has been liquidating significant amounts of Bitcoin, totaling hundreds of millions of dollars.
The sell-off intensified recently, with roughly $75 million worth of bitcoins being transferred to exchanges such as Coinbase (NASDAQ:), Kraken, and Bitstamp. The sell-off was seen as part of a broader strategy, with $315 million worth of bitcoins sold since mid-June, bringing total sales to over $390 million in less than a month.
Despite market concerns, these sales represent a small fraction of Germany's total holdings, leaving 40,359 bitcoins still in reserve. Interestingly, the German government recently withdrew 1,915 bitcoins worth $111.5 million.
Market reactions
As Germany continues to liquidate its Bitcoin holdings, analysts see it as an opportunity to profit from the dip. The German government’s ongoing sales are being closely monitored, with analysts predicting near-term market volatility. The strategic implications of these actions, both for Germany’s financial future and the broader cryptocurrency market, are a topic of significant debate.
Some suggest that Bitcoin’s recent performance could signal a “summer pause,” a pattern seen in previous cycles. This analysis noted that the cryptocurrency’s future in the fourth quarter depends on its ability to regain and sustain key price levels in the coming weeks.
Adding to the market's unease is a notable decline in whale transactions, which have fallen significantly from 17,000 to less than 12,000 in just one week. This decline could indicate a waning interest from large investors or a possible consolidation phase.
Prominent trader Peter Brandt has issued a bearish prediction, suggesting that Bitcoin could fall to $44,000. Brandt highlights that the current correction should worry investors, noting that Bitcoin has broken above the 200 exponential moving average, a historically reliable support line.
This break of support raises the possibility that a more significant correction is underway.
