The largest cryptocurrency could drop to as low as $50,000 in coming weeks as billions of dollars of supply may be released to the market.
The prospect of bitcoins from defunct crypto exchange Mt. Gox and the German government hitting exchanges has sent the price plunging 10% in the past seven days.
Bitcoin (BTC) traders expect prices to drop to as low as $50,000, a level not seen since mid-February, in the coming weeks, as the largest cryptocurrency by market cap could face billions of dollars worth of selling pressure.
BTC prices have nosedived more than 10% in the past seven days, CoinGecko data shows, falling below a critical technical indicator on Thursday and erasing all gains since the end of February.
Trading firms such as QCP Capital have attributed the bearish sentiment to wallet activity from a German government entity and defunct crypto exchange Mt. Gox, and some market analysts say there’s more pain ahead.
“Bitcoin selling pressure is unlikely to decrease in the coming days,” said Rachel Lin, founder at on-chain crypto exchange SynFutures, in an interview. “The German government still has over $2.3 billion worth of Bitcoin, Mt. Gox has more than $8 billion, and the US government has over $12 billion.
“The market expects most Mt. Gox users to dump their tokens, but we might see a bounce back if the selling is lower than anticipated. On the other hand, if there is enough selling to push the price lower, we might be looking at the $50,000 level soon,” she said.
Alex Kuptsikevich, a FxPro senior market analyst, echoed the sentiment in an email to CoinDesk: “Bitcoin dropped below the 200-day moving average and has so far been unable to bounce back above it, trying to stay within established patterns.
“From the current position, a further drop to $51,000 (February consolidation area) is more likely than the same amount of growth to $65,000,” Kuptsikevich added. Moving averages are a measure of an asset’s closing prices in a time frame that can help identify a trading opportunity.
Mt. Gox started distributing bitcoin and bitcoin cash stolen from clients in a 2014 hack on Friday, sending BTC down 8% as traders reacted.
In addition, a wallet connected to the German Federal Criminal Police Office (BKA) has moved millions of dollars worth of bitcoin to crypto exchanges since mid-June. Traders say these movements imply an intention to sell the assets that were forfeited in 2013 from a piracy marketplace.
Meanwhile, BTC prices seemed to briefly recover mid-morning in Europe, rising to nearly $55,000 from a low of $53,600 in early Asian hours. The sudden drop had caused over $550 million in crypto longs, or bets on higher prices, to be liquidated in the past 24 hours.
