Bitcoin Plunges Below $58,000: Why?

Bitcoin is in another slump, plunging below $58,000. Between the impending Mt. Gox payouts and the U.S. economic uncertainty, the iconic crypto is reeling. Let’s explore the reasons for the drop and what’s coming next.

Miners' Surrender and Mt. Gox

The price of Bitcoin fell 4% in 24 hours, reaching $57,599. This is its lowest level since early May.

This sharp drop is partly explained by the imminent repayment of Mt. Gox creditors. The bankrupt crypto platform is preparing to pay out around 142,000 BTC. That's nearly $9 billion, on the market.

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Such an injection of bitcoins is likely to cause substantial selling pressure. This will increase volatility and create a climate of uncertainty among investors.

Rachael Lucas, crypto analyst at BTC Marketshighlights the importance of the $60,000 resistance line. If Bitcoin remains below this psychological threshold, we could see significant fluctuations in the short term. This situation is a reminder that the crypto market, despite its growing maturity, remains vulnerable to one-off events.

The impact of the American economy

Economic concerns in the United States add another layer of complexity. Uncertainty around inflation and interest rates continues to weigh heavily on bitcoin.

Federal Reserve Chairman Jerome Powell recently said that more efforts are needed to control inflation, while acknowledging significant progress. The statement reinforced risk-off sentiment among investors.

The market had been hoping for multiple rate cuts this year, but the Fed is only considering one cut for the rest of the year. This change in outlook has contributed to a climate of uncertainty, making investors more cautious and putting more pressure on Bitcoin. This situation shows how macroeconomic dynamics can influence cryptocurrency markets.

The outlook for bitcoin

Despite the current turmoil, some analysts remain optimistic. Experts at QCP Capital and Coinbase had anticipated a rebound in bitcoin in July, based on historically positive seasonality.

However, Bit.com's Toya Zhang points out that without a significant drop in interest rates and an increase in liquidity, it is difficult to imagine a noticeable upside in the near term.

Bitcoin ETF trading volumes also fell, falling to around $800 million on Wednesday.

This drop in volume reflects a feeling of caution among investors, who prefer to wait for the market to stabilise before committing further.

Lucas of BTC Markets predicts that bitcoin will continue to see volatility in the days ahead as the market digests the Mt. Gox repayments and reacts to broader economic signals.

Bitcoin is at a critical crossroads, facing internal and external pressures. Miner capitulation and US economic uncertainty are creating a climate of volatility.

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