Bitcoin Dropped to Four-Month Low Following Government and Mt. Gox Sell-offs

Bitcoin fell to its lowest price since late February following news of massive liquidation in the market as well as fears of an impending Mt. Gox sell-off. At one point, the cryptocurrency dipped below the $54,000 mark but quickly bounced back above $55,000.

Bitcoin will first have to pass the stubborn $70,000 resistance if it hopes to beat the current ATH of just under $74,000, which it reached on March 14.

A Thriving Market?

Despite the recent downturn, the cryptocurrency market is seemingly thriving. The whole market saw positive movements in the first quarter, led by Bitcoin’s increase from $44,000 at the start of the year to an all-time high of nearly $74,000 in March. 

Meme coins, especially those developed on the Solana network, enjoyed boosts to their values. Another sector of the cryptocurrency market to have experienced growth, in terms of the tokens available, is the play-to-earn segment. Play-to-earn games are becoming extremely popular as they allow gamers to play games and earn digital coins for their achievements. Most gamers review money-making game rankings to see the play-to-earn games currently available. According to Hyunsoo Kim from B2C KR, some highlights include: 

• PlayDoge is a nostalgic game based on the Tamagotchi of the 1990s.
• SHIBASHOOT combines the appeal of the latest Shiba Inu-based meme coins with a Wild West theme.
• Mega Dice Token is an iGaming token specifically for use on the Mega Dice casino.

According to crypto writer, Hyunsoo Kim, many of these P2E tokens are expected to see price increases in 2024.

Failed Attempts At $70,000 Resistance

Bitcoin’s strong first quarter was boosted by the introduction of spot ETFs: something the market and analysts have been waiting on for years. But, despite Bitcoin’s best efforts, prices could not push through and hold past the $70,000 resistance, despite trying several times through March, April, May, and even early June.

By the middle of June, it became apparent that bulls had lost their steam. First, the $65,000 support dropped, and then $60,000 put up minimal resistance with the line finally being breached on July 4. Once $60,000 fell, there was little support to hold further declines, and at one point on July 5, BTC prices fell below $54,000 although they did bounce back shortly after.

U.S. Government Selloff

Some of the losses can be attributed to moves by governments to cash in on assets seized during criminal raids. The U.S. government moved over 3,000 ETH to an unknown address, just a week after moving nearly 4,000 BTC to Coinbase Prime.

The assets were seized from black market drug trader Banmeet Singh, who handed over his cryptocurrency holdings as part of a plea deal with the government. The U.S. government is the largest state crypto holder and its movements are closely monitored by analysts and commentators.

German Government Selloff

The German government is also known to hold a sizeable supply of cryptocurrency, which was also seized during criminal swoops. They have been very active in the past few weeks, with the latest move coming at the beginning of July, when they shifted $17 million of the digital asset to exchanges.

It is believed that the government holds around 50,000 BTC and they have recently offloaded more than 6,500 of the coins. The assets were seized during the closure of the pirate movie website Movie2k.

Justin Sun, founder of cryptocurrency Tron, has tweeted that he would be willing to purchase the remaining Bitcoin from the German government to prevent any further negative impact on the market. It is unclear whether the offer is serious, as Sun has a history of posting Bitcoin-based rhetoric, and it would cost around $2 billion to complete the sale.

Meanwhile, one German MP, Joana Cotar slammed the decision to sell the crypto off and suggested that it offered a means of better diversifying the country’s assets. She has called for the government to develop a Bitcoin strategy that would include holding the cryptocurrency and potentially even issuing Bitcoin bonds.

Mt. Gox Creditor Payments

Mt. Gox is also causing a stir in the market as trustees for the former cryptocurrency exchange have started transferring Bitcoin to wallet addresses and the estate declared that it has started to make payments to creditors owed money from the exchange’s collapse in 2014.

Mt. Gox was established by Jed McCaleb, who used a domain that he had previously purchased for use to sell Magic: The Gathering trading cards. The exchange was sold to Mark Karpeles in 2011 and, at its peak, it handled more than 70% of all Bitcoin transactions.

From 2011 to 2014, hackers stole Bitcoins from the exchange using stolen user credentials. And, at the start of 2014, users expressed concerns over the site’s handling of withdrawals with many users unable to gain access to their money from Bitcoin sales. It was discovered that up to 850,000 Bitcoins had been stolen over three years.

200,000 of the coins were later recovered, but the exchange was forced to file for bankruptcy, leaving its users owed millions in outstanding payments. Japanese courts and Mt. Gox creditors reached an agreement in November 2021, essentially giving the estate until 2024 to pay back creditors.

In June, trustees declared that it would start making repayments in the first week of July. On July 5, the estate announced that it had started sending Bitcoins to some creditors. It didn’t specify which exchanges were used, who had received payments, or how much had been sent, but the news sent the cryptocurrency market into something of a panic.  

Bitcoin Liquidation

In total, more than half a billion dollars of cryptocurrencies were liquidated following the news of the Mt. Gox coin distribution, causing a considerable loss across the whole market.

Mass sell-offs of the various currencies led to around $170 billion being shed from the market, leading to a 6% drop on July 5. The U.S. and German governments have likely not finished their wrangling, and the Mt. Gox estate is certain to continue making waves. $50,000 seems the next most likely stop for Bitcoin.

Analysts Still Expect Record Prices

However, despite the drop, many analysts expect BTC prices to go on and experience all-time highs by the end of the year, with some predicting prices will reach $100,000.

Analysts have pointed to various factors in their predictions. Historically, July has been a good month for Bitcoin prices, especially when following a poor June. If Bitcoin bounces back quickly from its early July losses, there’s no reason it couldn’t challenge the $70,000 resistance line once again.

And BTC went through its third halving earlier this year. 12 months after the first two halvings, BTC prices rocketed, suggesting that the same might cause a boost in prices in early 2025. However, other analysts have warned that this might already be built into the current price.

Finally, Ether spot ETFs should launch imminently, and when Bitcoin ETFs launched, it caused a big spike in prices. Investors will be hoping to see the same results this time around.

Conclusion

Bitcoin had a difficult month and slumped further at the beginning of July, as major governments have moved their holdings to exchanges and Mt. Gox creditors have started to receive the money they’ve been waiting ten years for.

The moves have seen massive amounts of Bitcoin liquidated and prices have fallen to the lowest they have been since late February. Although there are hopes of a recovery later in the month, prices will likely drop further to $50,000 before that happens.

FAQ

What Has Caused Bitcoin’s Recent Price Slump?

A lot of factors have contrived to cause Bitcoin’s price to slump. As well as a correction in prices following a bullish first quarter, the U.S. and German governments have been moving large amounts of Bitcoins to exchanges, ready for a sell-off. Mt. Gox bankruptcy trustees have also announced they have started transferring holdings to creditors.

And many may be waiting for the results from November’s presidential election, pinning their hopes on a Trump victory, as the last few months have seen him become staunchly pro-Bitcoin.

Will Prices Recover?

Although it’s difficult to predict what Bitcoin prices will do, many analysts expect BTC prices to bounce back later in 2024, with many predicting that the bounce will start as early as this month.

Is Now A Good Time To Buy Bitcoin?

Buyers looking to spend Bitcoin, for example at an anonymous casino or to purchase meme coins at presale, can buy Bitcoin without too much concern over price. Those looking for short-term gains may want to hold off until the government and Mt. Gox sell-offs are complete, and potentially even until August 4^th, which is when presidential candidates are finalized. With some predicting that Bitcoin will eventually go on to a value of $1 million or more, long-term holders could still stand to make a lot of money.