Over the last 24 hours, the price of Bitcoin (BTC) fell by as much as 4.8%, reaching a fresh low of $60,601 after trading above $64,000 just a day earlier. This decline can be attributed to a confluence of factors, including the events of the Mt.Gox saga, significant liquidation of long positions and the ongoing capitulation of miners.
#1 Mt.Gox News shakes market confidence
The sudden and pointed drop in the price of Bitcoin from $62,900 to $60,601 coincided closely with a fresh statement from the board members of the now-defunct Bitcoin exchange, Mt.Gox. The exchange, central to one of the earliest and largest Bitcoin thefts, said it would begin repaying victims using assets stolen in the 2014 hack in July 2024.
According to Nobuaki Kobayashi, rehabilitation superintendent, the repayment process will include Bitcoin (BTC) and Bitcoin Cash (BCH) and will begin in early July. “The Rehabilitation Trustee was preparing to repay in Bitcoin and Bitcoin Cash under the Rehabilitation Plan […] Repayments will be made from the beginning of July 2024.” – added announcement reads.
This news was received negatively by the market, primarily due to fears of oversupply from beneficiaries who are likely to sell off assets that have appreciated significantly since their initial investment period prior to 2013. In May 2023, the trustee transferred over £140,000 BTC worth approximately $9 billion.
The deal was significant because it was the funds’ first trade in five years and was closely watched by analysts and traders. The market reactions were immediate; Bitcoin prices fell as speculation emerged about the market potentially being flooded with these repaid coins.
#2 Record liquidations of long positions
The downward pressure was further exacerbated by a noticeable enhance in the liquidation of long BTC positions. According to the latest data Coinglass liquidated long positions worth a staggering $85.4 million. The event marks the largest liquidation since April 30 and May 1, when over $195 million in long positions ($95 million and $100 million, respectively) were liquidated, correlating with a 12.5% price decline over those two days.
Such liquidations occur when the market price reaches the liquidation price of leveraged positions, triggering an automatic sell-off to cover losses, further lowering the price. This cascading effect contributes significantly to rapid price declines and increased market volatility.
#3 The continued capitulation of miners increases the pressure to sell
The third critical factor affecting Bitcoin’s price is the ongoing capitulation of miners. Miner capitulation refers to a situation where miners, especially those operating at marginal efficiency, begin to sell mined BTC to cover operating costs resulting from unprofitability. This phase could put significant downward pressure on Bitcoin prices as it increases the supply of Bitcoin being sold in the market.
As reported by NewsBTC, renowned cryptocurrency analyst Willy Woo and others have indicated that miner capitulation is a key phase to monitor, especially after Bitcoin halving events that cut miners’ rewards in half, thereby straining their profitability. Woo recently noted that recovery from such capitulations has historically been snail-paced and closely tied to the recovery of mining activity and mixing rates.
Cryptocurrency expert Jelle, speaking via X, highlighted on the ongoing nature of today’s capitulation, saying: “Hash Ribbons show that the miners’ capitulation continues – exactly what you want to see after halving. Generally speaking, the market begins to rise once the capitulation phase is over.
At the time of publication, the BTC price was $61,241.
Featured image from iStock, chart from TradingView.com
