Bitcoin (BTC) Price Plummets Over 10.5% to Around $57,000, Nearing Oversold Threshold

This past week, Bitcoin has plummeted over 10.5% to around $57,000. At its lowest, BTC touched $53,550, driven by fears of a market dump

Bitcoin (BTC) fell below $54,000 on Saturday amid fears of a market dump.

The world’s largest cryptocurrency dropped over 10.5% in the past seven days to trade at $57,000 at press time (00:02 UTC). BTC hit a low of $53,550 during the downturn, fueled by concerns over Mt. Gox’s ongoing reimbursement of over 140,000 BTC to its clients.

The last time BTC traded below $54,000 was on March 28.

Bitcoin price dropped sharply this week amid fears of a market dump. Source: CoinGecko

The market downturn also coincided with reports of the German government’s Bitcoin liquidations, with authorities selling a portion of the BTC seized in a recent money laundering case.

Meanwhile, the broader cryptocurrency market lost over $170 billion in combined valuation over the past 24 hours, according to data from CoinGecko. The market capitalization of all cryptocurrencies stood at $2.7 trillion at press time, down from over $2.9 trillion on Friday.

The market sentiment shifted to “extreme fear” on Saturday, a stark contrast to the “greed” sentiment reported earlier this week.

Despite the downturn, Bitcoin bulls managed to recover some lost ground with the most recent daily close at $58,250, just short of the desired $58,450, traders noted.

The sentiment was also hampered by signs of German government disposals of seized Bitcoin, a report noted.

Germany continues to sell Bitcoin, signaling a potential plan to liquidate portions of its reserves.

Arkham, which tracks Germany’s Bitcoin wallet, noted that the government still holds over 40,000 Bitcoin worth more than $2 billion.

Bitcoin’s daily relative strength index (RSI) reading stood at 32, close to its oversold threshold of 30, which could signal a potential reversal or a slowdown in the current downtrend, hinting at a possible rebound.

Bullish signs

One key piece of information to look at is the expectation of U.S. interest rate cuts.

As a slowdown in employment growth continues, the Fed is looking forward to cutting rates to stimulate the weak job market.

Lower interest rates are generally bullish for Bitcoin and other riskier assets because they make traditional safe investments less attractive.

Another important indicator is the resumption of inflows into U.S.-based spot Bitcoin exchange-traded funds (ETFs) after two days of consecutive outflows, with spot Bitcoin ETFs seeing their largest net inflows in a month, totaling $143.1 million.

However, crypto analyst Willy Woo pointed out that it is difficult to predict price movements based on these numbers as BTC futures have flooded the market.

Everyone is looking at the wrong thing.

– 9332 spot BTC sold so far by Germany

– 170,000 paper BTC synthesized since the last 72k top

It's awful hard for spot demand to move price up if that much paper supply has flooded a market.

Pro tip: Long spot, not futures.

The hashrate also dropped by 7.7%, reaching a four-month low of 576 EH/s after hitting a record high on April 27.

This decline suggests that some miners are scaling back operations, reflecting the financial stress within the mining community post-halving.

These metrics signal that the Bitcoin market might be nearing its bottom, similar to previous cycles where miner sell-offs and operational reductions preceded market recoveries.

Price analysis

Historical market cycles have shown that Bitcoin’s halving event, which cuts the supply of new Bitcoins, has always preceded a period of price expansion lasting between 12 and 18 months before producing a cycle top.

The last halving took place on April 19 this year, so those historical time frames have yet to pass.

Analyst Peter Brandt highlighted a significant bearish pattern: the bear flag. Brandt also marked $44,000 as a potential bottom price level.

This pattern indicates potential further declines for Bitcoin, and Brandt's chart visually depicts this bearish trend, signaling caution for investors.

This pattern, if valid, suggests potential further declines for Bitcoin before reaching a bottom, which Brandt's chart marks at around $44,000.

Meanwhile, another trader, Ali Martinez, pointed out that BTC needs to climb up to $61,000 to revive the uptrend, as it is currently lacking any support levels.

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