Bitcoin went through a rough patch recently, with its price dropping below $57,000 on July 4 and hitting as low as $55,300. This significant drop led to over $193 million in leveraged Bitcoin contracts getting liquidated within 24 hours, according to CoinGlass data. The liquidations included $154 million in long contracts (bets on Bitcoin’s price going up) and $39.06 million in short contracts (bets on Bitcoin’s price going down).
The sudden drop in Bitcoin’s price came just three days after it surged to around $62,000 on July 1. There are concerns that Bitcoin might drop further to $50,000, a scenario that many analysts are predicting. Despite this uncertainty, participants in Bitcoin ETFs remained calm and did not rush to liquidate their holdings.
While there were net outflows of $20.45 million from Bitcoin ETFs on July 3, it was a far cry from the massive liquidations seen in the final weeks of June. However, the situation could change as investors return from the July 4 holiday and potentially decide to exit their positions in large numbers.
The current selling pressure on Bitcoin is partly due to the upcoming Mt. Gox repayments scheduled for this month. The expectation of 140,000 bitcoins worth $9.4 billion being released into the market has caused significant price drops. Even small test transfers of $25 by Mt. Gox have triggered panic among investors.
Adding to the downward pressure on Bitcoin is the sale of thousands of bitcoins by a wallet associated with the German government. As more holders see these sales and decide to take profits by selling their own bitcoins, the overall market experiences further declines. Despite these challenges, analysts remain optimistic that Bitcoin will bounce back after hitting the $50,000 mark.
Overall, the recent turmoil in the cryptocurrency market serves as a reminder of the volatility and unpredictability that come with investing in digital assets. Investors need to stay informed, exercise caution, and be prepared for sudden price swings in the cryptocurrency space.