Bitcoin’s value fell below $59,000 (£46,286) on Thursday as multiple factors exacerbated selling pressure on the digital asset. Bitcoin (BTC-USD) traded down 3.9% over the 24 hours, changing hands for $58,770, as of the time of writing.
Other cryptocurrencies, ether (ETH-USD) and solana (SOL-USD) have fallen further, decreasing by 4.6% and 7.3% respectively. The global cryptocurrency market cap now stands at $2.28tn, a decrease of 4.1% over the past day, according to Coingecko data.
Bitcoin liquidations spike
The recent bitcoin price drop has been exacerbated by a spike in long liquidations. Futures traders betting that the price of bitcoin and other cryptocurrencies will increase in value have lost over $240m in the past 24 hours, according to CoinGlass data.
Bitcoin futures saw more than $61m in long liquidations, while the cryptocurrency market as a whole recorded over $247m (£193.66m) in long liquidations. A long liquidation occurs when an investor who holds a long position in a financial instrument, such as bitcoin or another cryptocurrency, is forced to sell that position. This typically happens in leveraged trading, where the investor has borrowed funds to increase their position size and they can’t meet margin requirements, resulting in the closure of the position to prevent further losses.
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Liquidations occur when an exchange forcefully closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin. This happens when a trader cannot meet the margin requirements for a leveraged position, lacking sufficient funds to keep the trade open.
Bitcoin is beset by multiple sell-pressure factors
Several factors have emerged over the past week to increase selling pressure on bitcoin. Notably, the Mt. Gox trustee’s announcement that creditors of the defunct exchange will begin receiving repayments totalling approximately 142,000 bitcoin, starting this month.
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Investors remain cautious about the possibility that Mt. Gox creditors could start dumping their redistributed bitcoin onto exchanges after waiting over a decade to receive them. Over $9.4bn in bitcoin is owed to roughly 127,000 Mt. Gox creditors. Many investors fear this could lead to many creditors cashing out after a decade of untouched profits.
According to data from Lookonchain, an unidentified whale transferred 1,723 bitcoin, worth over $168m, to Binance in the past 24 hours. This transfer to the largest crypto exchange could suggest that this entity is looking to sell and secure profits.
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Nevertheless, the $9bn from Mt. Gox could be offset by institutional inflows to US-based spot bitcoin exchange-traded funds (ETFs). According to Dune analytics, these ETFs have accumulated over $52.5bn in bitcoin since their launch in January of this year.
Spot bitcoin ETFs see net outflows
However, the eleven spot bitcoin ETFs in the US experienced a total daily net outflow of $20.45m on Wednesday. Only two funds recorded net inflows, while the remaining nine showed zero flows.
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Grayscale’s GBTC reported daily net outflows of $26.99m, partially offset by $6.55m in net inflows to Fidelity’s FBTC, according to SoSoValue data. The other nine ETFs, including BlackRock’s IBIT, had zero net flows.
On Wednesday, the eleven Bitcoin funds had a trading volume of approximately $800m, down from $995m on Tuesday. This recent trading volume is significantly lower compared to March, when daily volumes ranged between $8bn and $10bn. Since their inception in January, these ETFs have accumulated a total net inflow of $14.62bn.
German government transferring seized bitcoin to crypto exchanges
Meanwhile, an analysis by Arkham Intelligence showed that the German government recently transferred $24m in seized bitcoin to the Kraken and Coinbase cryptocurrency exchanges.
These bitcoin transfers originated from a wallet connected to the German Federal Criminal Police Office (BKA) and could be linked to the BKA’s 2013 seizure of nearly 50,000 bitcoin from a film piracy website.
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Arkham Intelligence data indicates that these transfers follow previous movements of $195m in bitcoin to exchanges last week. In total, over $425m has been shifted in the past week by the BKA-associated wallet.
The transfers to exchanges may signal an intent to liquidate some of the assets, potentially adding further downside pressure on the digital asset.
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Another point of selling pressure has emerged, as according to data from Arkham Intelligence, the US government recently sent 3,940 bitcoin to the Coinbase cryptocurrency exchange. The data indicated that the bitcoin was seized earlier in 2024 from Banmeet Singh, a convicted drug dealer.
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