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Bitcoin’s price has continued its downward trajectory, reaching a four-month low as multiple factors contribute to increased selling pressure and growing concerns about a potential bear market.
The ongoing refund of tokens to clients affected by the 2014 Mt. Gox hack remains a significant factor driving Bitcoin’s decline. While the exact amount of the distribution is unclear, wallets associated with the exchange moved a substantial $9 billion worth of tokens earlier this year. Additionally, the German government’s offloading of confiscated Bitcoin, estimated to be worth at least $2 billion, has added to the selling pressure.
The sharp drop in Bitcoin’s price has also raised concerns about potential selling from major miners, who may need to offload holdings to cover costs after the Bitcoin halving earlier this year reduced miner rewards.
These factors have contributed to a significant decline in Bitcoin’s value, with the cryptocurrency losing roughly 15% of its value over the past month.
While Bitcoin has bounced back from last week’s low of $53,600, it remains in a technical downtrend from its March record high of $73,800. Eugene Cheung, head of institutions at Bybit, acknowledges the recent market correction but maintains optimism for the medium-term outlook. He points to the $57,000 support level as a sign of market resilience and expects a healthy reset within the ongoing bull market.
However, data from CryptoQuant paints a more bearish picture, suggesting that a significant price correction or even a sustained bear market could be on the horizon. The firm’s profit and loss index, currently hovering around its 365-day moving average, has historically indicated major declines when it crossed below this level. Additionally, CryptoQuant’s bitcoin bull-bear market cycle indicator is approaching a critical level that could signal a descent into a bear market.
Overall, the combination of Mt. Gox refunds, German government selling, potential miner capitulation, and bearish technical indicators have created a challenging environment for Bitcoin. While some experts remain optimistic about the long-term outlook, the current market conditions suggest that further declines may be imminent.
