A worsening macroeconomic climate and the collapse of industry giants resembling FTX and Terra have weighed on bitcoin’s price this 12 months.
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Bitcoin’s price slumped to around $57,000 apiece Thursday, hitting a two-month low after the U.S. Federal Reserve released minutes from its June meeting indicating the central bank is not yet able to cut rates of interest.
At around 2:30 p.m. London time, the digital currency fell around 5% in 24 hours to $56,837, falling below the $57,000 mark for the primary time since May 1, based on data from crypto rating site CoinGecko. Since then, bitcoin has pared losses somewhat and was trading at $57,932.57, down 3.4% as of 5:05 p.m. London time.
Rival token ether, the world’s second-largest cryptocurrency, was down 5% at $3,120.
It comes after the Federal Reserve on Wednesday released minutes from its June meeting which showed officials are reluctant to lower rates of interest until additional data shows inflation moving sustainably toward the central bank’s 2% goal.
Higher rates of interest are typically less favorable for bitcoin and other cryptocurrencies because it dampens investor risk appetite.
Bitcoin stormed to an all-time high of above $73,700 in March this 12 months after the Securities and Exchange Commission approved the primary U.S. spot bitcoin exchange-traded fund, or ETF.
ETFs allow investors to purchase a product that tracks the worth of bitcoin without owning the underlying cryptocurrency. Crypto proponents say this has helped legitimize the asset class and make it easier for larger institutional investors to become involved.
Since then, nevertheless, bitcoin has been trading inside a spread between roughly $59,000 and $72,000.
Recently, the world’s largest cryptocurrency has been pressured by news of collapsed bitcoin exchange Mt. Gox readying the distribution of around $9 billion value of coins to users, which is anticipated to steer to some significant selling motion.
On Thursday, a small amount of bitcoin was moved from three wallets previously related to Mt. Gox, based on Arkham Intelligence. The most important movement was for $24 value of the cryptocurrency. It was not immediately clear if this transaction was made in reference to the Mt. Gox repayment plan.
Elsewhere, the German government on Thursday sold roughly 3,000 bitcoins — value roughly $175 million as of today’s prices — from a 50,000-bitcoin pile seized in reference to the movie piracy operation Movie2k, based on blockchain evaluation firm Arkham Intelligence .
Arkham, which is tracking the German government’s bitcoin wallet, said that the assets were moved to crypto exchanges Kraken, Bitstamp, and Coinbase, in addition to an separate, unidentified wallet. “These funds are likely moving to a deposit for an institutional service or OTC,” Arkham said in a post on X.
Can bitcoin still gain from here?
Nonetheless, analysts at crypto data and research firm CCData said in a research report Tuesday that bitcoin hasn’t yet reached the top of its current appreciation cycle and is prone to hit a fresh all-time high.
Based on the report, historical market “cycles” have shown that bitcoin’s so-called “halving” event — which cuts the provision of recent bitcoins to the market — has at all times preceded a period of price expansion that may last between 12 to 18 months “before producing a cycle top.”
The last bitcoin halving took place on April 19 this 12 months, so those historical timeframes have yet to pass.
“Furthermore, we now have observed a decline in trading activity on centralised exchanges for nearly two months following the halving event in previous cycles, which seems to have mirrored this cycle. This means that the present cycle could expand further into 2025,” CCData said.
Meanwhile, bitcoin bull Tom Lee told CNBC’s “Squawk Box” Monday that he still sees bitcoin hitting $150,000 despite the “overhang” from Mt. Gox’s upcoming disbursement of tokens to creditors.
“If I used to be invested in crypto, knowing that certainly one of the most important overhangs goes to vanish in July, I’d think it is a reason to really expect a fairly sharp rebound within the second half,” Lee, Fundstrat Global Advisors’ co-founder and head of research, said within the TV interview.
