Bitcoin price is on a downward trajectory. The cryptocurrency has fallen 17% over the past month, reaching its lowest level since February 2024. While there has been a compact rebound over the past five days with a 1.33% raise, this compact raise has not offset the significant decline seen in recent weeks.
In fact, Bitcoin price fell as low as $53,500 before buying interest picked up, allowing it to reintegrate its previous support at $56,500. Currently trading at $57,800, it has fallen below the critical $60,000 level.
Still, a pressing question remains: Will Bitcoin return to previous highs or be doomed to further decline, potentially reaching the 2022 lows that wreaked havoc on the cryptocurrency market?
What led to the recent decline in Bitcoin value?
Currently, two main reasons have led to the decline in the price of Bitcoin. The first is the potential start of distribution of confiscated Bitcoins from the failed Tokyo cryptocurrency exchange, MT. Gox, which was once a famed cryptocurrency platform that collapsed after most of its crypto assets were stolen by hackers between 2011 and 2014.
The second factor influencing the price of Bitcoin is the German government’s mass sale of Bitcoin. For several weeks now, the German government has been liquidating significant amounts of Bitcoin, totaling hundreds of millions of dollars.
The sell-off has intensified recently, with around $75 million worth of Bitcoin being moved to exchanges like Coinbase (NASDAQ:), Kraken, and Bitstamp. The sell-off was seen as part of a broader strategy, with $315 million worth of Bitcoin having been sold since mid-June, bringing the total sales to over $390 million in less than a month.
Despite market concerns, this sale represents a compact portion of Germany’s total holdings, leaving 40,359 Bitcoins in reserve. Interestingly, the German government recently withdrew 1,915 Bitcoins worth $111.5 million.
Market reactions
As Germany continues to liquidate its Bitcoin holdings, analysts see this as an opportunity to capitalize on the decline. The ongoing German government sell-off is being closely monitored, with analysts predicting near-term market volatility. The strategic implications of these actions, both for Germany’s financial future and the broader cryptocurrency market, are the subject of considerable debate.
Some have suggested that Bitcoin’s recent performance could indicate a “summer lull,” a pattern seen in previous cycles. This analysis indicated that the cryptocurrency’s future in Q4 hinges on its ability to reclaim and maintain key price levels in the coming weeks.
Adding to the market turmoil is a noticeable drop in the number of whale trades, which have fallen significantly from 17,000 to under 12,000 in just one week. This drop could signal waning interest from larger investors or a potential consolidation phase.
Well-known trader Peter Brandt has issued a bearish forecast, suggesting that bitcoin could fall to $44,000. Brandt emphasizes that the current correction should worry investors, noting that bitcoin has broken through the 200-period exponential moving average, a historically reliable support line.
This breach of support raises the likelihood of a more grave correction occurring.
