NOIDA (CoinChapter.com)—The price of Bitcoin plummeted below $54,000 on July 5 following a nearly 7% drop due to Mt. Gox token dump fears. However, bulls entered the market to plug the leak, helping BTC price recover and cross above $56,500 at the time of writing.
Several factors contributed to the decline, including Mt. Gox repayments and German government sell-offs, amplifying market fears and triggering sell-offs.
Mt. Gox Continues To Haunt Bitcoin’s Dreams
The legacy of Mt. Gox continues to affect the cryptocurrency market. The defunct exchange has begun repaying its creditors, distributing approximately $9.5 billion worth of Bitcoin. This has created uncertainty among investors, who fear that the sudden influx of BTC could saturate the market and drive prices down.
Market reactions to significant movements of Bitcoin, particularly from sources associated with insolvency proceedings, often lead to increased volatility.
Another critical element was the German government’s transfer of 500 BTC to various exchanges, including Bitstamp, Coinbase, and Kraken. The move, valued at around $29.05 million, fueled speculations of an imminent large-scale sell-off.
The recent offloading of 1,300 BTC by the German government on July 4, which caused Bitcoin’s price to drop below $58,000, continues to affect the market. July 5’s transfer of 1,700 BTC worth nearly $100 million to an offloading wallet added to the bearish sentiment.
Despite BTC prices’ bleeding gains, analysts remained positive about BTC’s future. Independent analyst Miles Deutscher claimed that though Bitcoin price action is bearish in the short term, the long-term gains far outweigh the losses, making the recent plunge feel “like a massive opportunity.”
Bitcoin Bleeds For Fourth Consecutive Day
Despite the recovery, the BTC price remained in the red on July 5, marking the fourth consecutive day of losses in July. The Mt. Gox plunge on July 5 took Bitcoin losses to nearly 15% since July 2 to a daily low near $53,550 on July 5.
However, the recovery could infuse some confidence in Bitcoin’s resilience, which could help the token start a recovery rally.
A recovery rally from here would see Bitcoin price rise to the 200-day EMA (green wave) resistance near $58,440 before targeting the resistance near $61,440.
On the other hand, if the Mt. Gox sell-off continues, Bitcoin price could drop to the support near $54,370. Moreover, breaching the immediate support level could see BTC price test the support near $52,130 before recovering.
The RSI for BTC became oversold, with a score of 28.1 on the daily charts.
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