The alpha crypto, Bitcoin, is struggling with a combination of issues that have undermined its early 2024 gains and cloud its near-term outlook. The most current concern stems from the long-awaited distribution of Bitcoin by the closed Mt. Gox exchange to creditors. Investors on edge about this $8 billion windfall worry a possible sell-off may flood the market and lower prices.
Mt. Gox Payouts Cast A Shadow
Once the leading cryptocurrency exchange worldwide, Mt. Gox was hacked in 2011 and hundreds of thousands of coins vanished. The exchange has been gradually closing its activities following bankruptcy declaration in 2014.
The news of creditor repayments recently has caused great anxiety within the bitcoin community. Analysts worry that a substantial number of these recovered Bitcoins might be sold, therefore depressing the value of the price.
For the king currency, the Mt. Gox story offers a two-edged blade. Although the recovery of misplaced currency marks a general improvement, one cannot ignore the prospect of major creditor selling. The danger of a price correction increases with increasing length of time Bitcoin sits below its $60,000 crucial support level.
Macroeconomic Jitters Fuel Uncertainty
Furthermore aggravating the situation of the crypto asset is the general uncertainty in conventional financial markets. Following the French elections, global investors remain wary; factors like US inflation numbers and Federal Reserve Chair Jerome Powell’s testimony are seen as possible causes of further general market turbulence. This anxiety has infiltrated the crypto market; Bitcoin reflects the skittishness of conventional assets.
Many times praised as a secure refuge amid economic crisis and a counter against inflation is Bitcoin. Still, the current relationship with conventional markets points to the ecology of cryptocurrencies maturing. Nowadays, more general macroeconomic events can influence the price swings of Bitcoin.
BTC price down in the last 24 hours. Source: Coingecko
Technical Indicators Offer Conflicting Signals
For hints regarding Bitcoin’s future direction, technical experts are painstakingly examining its price patterns. A possible turning point some refer to as the 200-day moving average. Should Bitcoin be able to recover ground above this pivotal point, the present downslope might be ending. Others caution, meanwhile, of a protracted drop should the price stay firmly below this important technical indication.
Data from Coangecko indicates that Bitcoin was trading at $65,701 at the time of writing, down 1.4% and 10.3% in the past 24 hours and seven-day period.
Some observers have hope in Bitcoin’s long-term future despite the present difficulties. Positive signs for the future they point to the increasing institutional acceptance of cryptocurrencies and the continuous evolution of the fundamental blockchain technology. The short-term picture, however, depends on how Bitcoin negotiates the choppy seas of the Mt. Gox creditor settlements and the larger macroeconomic environment.
Featured image from CNN, chart from TradingView