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Bitcoin’s price plummeted to a two-month low on Thursday, breaching a crucial support level as traders remained cautious due to concerns over potential selling pressure, particularly from the defunct crypto exchange Mt Gox.
Despite the weakening dollar, which usually supports Bitcoin, the world’s largest cryptocurrency saw a significant 3.2% drop in the past 24 hours, reaching $59,046.0 by late evening. The token even briefly touched $58,055.4, its lowest point in months.
The primary catalyst for this decline was the announcement by Mt Gox liquidators that they will begin returning Bitcoin stolen during a 2014 hack to clients from early July. With Bitcoin’s massive price increase since then, traders anticipate many recipients will likely sell their regained tokens, creating substantial selling pressure.
This fear, along with reports of the German government selling confiscated Bitcoin, has fueled a wave of aversion towards the cryptocurrency. Large Bitcoin holders, known as whales, have been seen moving their holdings to exchanges, potentially for sale, further contributing to the negative sentiment.
The ripple effect of this selling pressure has extended to other cryptocurrencies as well. Ethereum, the second-largest token, experienced a 3.5% drop to $3,242.79, erasing recent gains spurred by speculation over a spot Ether exchange-traded fund. Other major altcoins like XRP, SOL, and ADA also saw significant losses.
While the weakening dollar, driven by expectations of interest rate cuts by the Federal Reserve, could have offered some support to crypto prices, it proved insufficient to counteract the overwhelming selling pressure. Hawkish signals from the Fed’s June meeting minutes and cautious remarks from Fed officials also tempered optimism about potential rate cuts.
The market’s focus now shifts to the upcoming nonfarm payrolls data, which will provide crucial insights into the state of the U.S. labor market and could influence the Fed’s future monetary policy decisions.
In summary:
- Bitcoin price plunged: Hit a two-month low due to fears of mass selling pressure.
- Mt Gox factor: Impending return of stolen Bitcoin from the defunct exchange spooked investors.
- Whales on the move: Large Bitcoin holders transferred tokens to exchanges, possibly for sale.
- Altcoins follow suit: The broader crypto market also suffered losses.
- Dollar weakness fails to support: Crypto prices remained under pressure despite a weaker dollar.
- Focus on nonfarm payrolls: Upcoming data will offer crucial clues about the U.S. labor market.
