Bitcoin (BTC) Price Drops by 4.8%, Plunging to New Low of $60,601 after Trading above $64,000

This decline can be attributed to a combination of factors, including developments from the Mt. Gox saga, a significant liquidation of long positions

Bitcoin (BTC) price dropped sharply on May 23, falling to a new low of $60,601 after trading above $64,000 the previous day, marking a decline of up to 4.8%. Several key factors contributed to this downturn, including the latest developments in the Mt. Gox saga, a significant liquidation of long positions, and the ongoing miner capitulation.

Bitcoin price crashed to a new low of $60,601 on May 23. This followed a steep decline from $62,900, which coincided closely with a new announcement from the trustees of the defunct Bitcoin exchange, Mt. Gox.

The exchange, which was central to one of the earliest and largest Bitcoin thefts, announced that it would start repaying victims using the stolen assets from a 2014 hack in July 2024. According to Rehabilitation Trustee Nobuaki Kobayashi, the repayment process will include Bitcoin (BTC) and Bitcoin Cash (BCH) and will start in early July. “The Rehabilitation Trustee has been preparing to make repayments in Bitcoin and Bitcoin Cash under the Rehabilitation Plan […] The repayments will be made from the beginning of July 2024,” the announcement reads.

This news was perceived negatively by the market, primarily due to fears of oversupply from beneficiaries likely selling off assets that have massively appreciated since their initial investment period before 2013. In May 2023, the trustee moved over 140,000 BTC, which is now worth approximately $9 billion.

This transaction was significant as it was the first movement of these funds in five years, which was being tracked closely by analysts and traders. Market reactions were immediate; Bitcoin prices tumbled as speculations about potential market flooding with these repaid coins took hold.

Adding to the downward pressure was a notable surge in the liquidation of long BTC positions. According to the latest data from Coinglass, a staggering $85.4 million worth of long liquidations were observed.

This event marks the largest liquidation since April 30 and May 1, when over $195 million ($95 million and $100 million respectively) in longs were liquidated, correlating with a 12.5% price drop over those two days.

Such liquidations occur when the market price reaches the liquidation price of leveraged positions, triggering automatic sell-offs to cover the losses, further driving the price down. This cascade effect contributes significantly to rapid price declines and increased market volatility.

The third critical factor affecting Bitcoin’s price is the ongoing miner capitulation. Miner capitulation occurs when miners, particularly those operating with marginal efficiency, begin selling their mined BTC to cover operational costs due to unprofitability, increasing the supply of Bitcoin being sold in the market and exerting substantial downward pressure on prices.

As reported by NewsBTC, renowned crypto analyst Willy Woo and others have pointed out that miner capitulation is a crucial phase to monitor, especially following the Bitcoin halving events that reduce miner rewards by half, thereby straining their profitability.

Woo noted recently that the recovery from such capitulations has historically been slow and tied closely to the resurgence in mining activity and hash rates. Crypto expert Jelle, speaking via X, highlighted the ongoing nature of this capitulation today, saying, “Hash Ribbons are showing that miner capitulation is ongoing — exactly what you want to see post-halving. Generally speaking, the market starts rallying once that capitulation phase comes to an end.”

At press time, BTC traded at $61,241.

News source：https://www.kdj.com/cryptocurrencies-news/articles/bitcoin-btc-price-drops-plunging-low-trading.html

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