Published: July 10th, 2024
Bitcoin fell six per cent on Monday, 8th July to USD 54,787, continuing a slide that had begun the previous Friday.
According to data from CoinGecko, the world's number one crypto dropped to a low of USD 54,000 on Friday, 5th July. BTC faces several persistent headwinds, including selling pressure from expected liquidations by the German government, the 127,000 creditors soon to recoup their lost crypto from the Mt. Gox hack, and general market uncertainty.
There was a brief rally above USD 58,000 on Sunday, 7th July, however those gains were conceded as Monday began and Bitcoin began to trade at its lowest point since February 2024.
According to Arkham Intelligence, the German government holds 39,825 BTC worth of sized BTC worth roughly USD 2.2 billion. Users of the shuttered Japanese exchange Mt. Gox, meanwhile, have been awarded a total of USD 7.7 billion in funds stolen in a high-profile hack more than a decade ago.
Crypto traders are naturally concerned about a two-pronged flood of BTC into the market. A report from K33 research said that ‘while it's still unclear clear what percentage of the Mt. Gox total will be sold at market, we expect significant selling pressure on Bitcoin in the coming weeks and months.’
Repayments to Mt. Gox creditors will start later in July, with administrators committing to disburse 142,000 in BTC and 143,000 in Bitcoin Cash.
At time of writing BTC had regained some lost ground and was trading at USD 59,160.
After crypto’s extended winter of 2022, a January 2023 report announced miners and traders were finally moving back into profit.
Blockchain analytics firm Glassnode said Bitcoin's realized price, or the average price investors are currently paying for BTC, had risen to roughly USD 19,600. For the previous 150 days, BTC’s average price had been USD $18,000. In both scenarios, crypto’s top coin had returned to profit territory, fetching prices above USD 21,000 for the first time in months.
BTC rallied in mid-January above the psychologically important USD 20,000 level. It was the first time since the implosion of troubled crypto exchange FTX. At that level it became profitable for mining firms to switch their expensive ASIC machines back on and start validating transactions again on the Bitcoin network. The 20k level also meant the average Bitcoin hodler could make a profit if they took action to liquidated their BTC holdings.
Miners were relieved, Glassnode said, that the economics of mining BTC had finally shifted back in their favor. Mining any BTC transaction demands robust computational power to solve complex math equations and create more Bitcoin. At the time, mining one new Bitcoin would cost a miner something in the order of USD 18,700. With Bitcoin trading above that level, the opportunity to turn a profit had returned.
BTC's price shot upward again after the publication of news that US inflation had begun to cool off. The Federal Reserve raised its benchmark rate again and again in 2022 to keep record-high inflation at bay. The extended effect weas to bring down the price risk assets, impacting both traditional equities and digital assets like Bitcoin.
The last time the Fed had raised interest rates was in December 2022, when it tacked on an additional fifty basis points. This was seen as a more cautious rise compared to the central bank’s previous 75 basis-point hikes. The US Bureau of Labor and Statistics also published a Consumer Price Index report in January 2023 which showed that inflation had dropped back to 6.4 per cent. This was a reduction from the seven per cent seen in November 2022.
In hindsight this appears to have spurred investor confidence, creating hope that the Fed would now stay on track to soften what had been a ‘hawkish’ policy direction on rates.
Later in the year, new data from CoinGecko showed that Bitcoin's spot trading volumes for the third quarter of 2023 had totaled just above USD 720 billion to-date. That put BTC on track for its lowest quarterly trading volume since Q1 2019.
Between 2019 and Q2 2023, quarterly trading volumes were close to USD 2 trillion. Without a major surge in September, the Q3 2023 figure was set to be significantly lower than that.
In July and August 2023, Bitcoin saw trading volumes of USD 345 billion and USD 354 billion, respectively. If September's volumes come in at a similar level of around USD 350 billion, quarterly trading volumes would reach around one trillion USD.
In the first quarter of 2019, CoinGecko says the trading volume for Bitcoin was USD 541 billion.
Number two coin Ethereum (ETH) experienced similar market conditions. In July and August of 2023, ETH posted trading volumes of USD 232 billion and USD 212 billion respectively.
With Ethereum’s September volumes expected to come in at roughly USD 220 billion, the total quarterly trading volume was set to tip just above USD 650 billion. As with BTC this would mark a low point not seen since 2019.
In Q4 2019, ETH’s total spot trading volume came in at USD 740 billion. A 2022 CoinGecko report tracked a 43 per cent drop in overall spot trading volumes for the crypto market in the second quarter of 2022.
BTC's price shot upward in January 2023 after news that US inflation started to cool off. The Federal Reserve raised its benchmark rate repeatedly in 2022 to keep record-high inflation at bay.
The Fed had just raised rates in December by another 50 basis points. This was seen as a more cautious rise compared to previous 75 basis-point hikes. The most recent CPI print showed that inflation had dropped back to 6.4 pe cent, down from 7 per cent seen in November.
