Bitcoin’s price recently experienced a significant drop, causing over $300 million in crypto market liquidations in just one day. Many are wondering what caused this sudden volatility.
Gayatri Choudhury, a Quantitative Research Analyst at Bitwise, pointed out two main reasons for the selloff, and surprisingly, neither of them are related to Bitcoin ETFs.
Firstly, Choudhury highlighted the actions of Bitcoin miners, a group often overlooked by market observers. Since the fourth Bitcoin halving in April, miners have been consistently selling their BTC due to lower revenues and high competition from global rivals. On June 9th, more than 3000 BTC were moved from mining pools to Binance, the highest amount in two months. This heavy selloff has historically correlated with downward price movements, as seen after the halving in April and late May.
A recent report by CryptoQuant also attributed the aggressive miner selloff to Marathon Digital, the largest publicly traded mining company. Marathon Digital sold 1400 BTC in June, representing 8% of its total BTC holdings. Additionally, miners sold 1200 BTC via OTC desks on June 10th, the highest daily volume since March. Choudhury mentioned that over $4.5 billion in assets moved from miner balances to exchanges in June, indicating significant selling pressure.
Another factor contributing to market concerns was the announcement from Mt. Gox on Monday, confirming that it would repay customers their long-lost Bitcoin in July after a decade of dormancy. Mt. Gox holds over 141,000 BTC, valued at more than $8.5 billion, causing fears of a sudden wave of BTC sell pressure.
Choudhury reminded investors that despite the current challenges, Bitcoin’s price has seen significant growth over the years. Just a year ago, Bitcoin was trading at $30,000, and the year before that, it was at $10,000.
While the impact of Mt. Gox’s sell pressure remains to be seen, the crypto community is eagerly anticipating the launch of Ethereum ETFs in the United States in July. Analysts at K33 Research predict that these ETFs could attract $4 billion in the first five months of trading.
As the market navigates through these turbulent times, it’s essential for investors to stay informed and cautious. The crypto landscape is constantly evolving, and understanding the various factors influencing price movements is crucial for making informed decisions.