Bitcoin prices bounced back today, climbing after falling to their lowest level in four months amid weak market conditions.

According to CoinMarketCap data, the world’s most prominent digital currency reached $56,856.61 this afternoon.

At the time, the cryptocurrency was up more than 5.8% after falling to $53,717.34, its lowest price since late February, shortly after midnight EST, additional data from CoinMarketCap showed.

After rising to a daily high above $56,800, the digital asset faced some volatility, but has held on to most of the gains made earlier today.

Explaining the recent fluctuations in Bitcoin prices, several analysts stated that the digital currency was oversold when it declined over the past 24 hours.

Several media reports pointed to the announcement that Mt. Gox’s trustee has begun making payments to certain creditors, sending the digital currency to its lowest level in four months in the past 24 hours.

Tim Enneking, managing partner at Psalion, commented on the development, but emphasized that several factors contributed to the losses in Bitcoin.

“In a market that was already relatively weak due to the post-ATH consolidation, the usual summer gloom and the SEC spot is teasing the actual date of ETH ETF trading, Mt. Gox dumping BTC receivers. The concerns (whether well-founded or not) clearly formed the proverbial straw that broke the camel’s back and sent BTC prices plummeting from $60k to around $53k,” he emailed. Said through the comments.

Armando Aguilar, an independent cryptocurrency analyst, also emphasized that several variables contributed to the decline in digital currency markets.

“As new supply from the Mt. Gox trustee hit the market, it showed transfers of BTC to unknown addresses, and the German government is also preparing to offload additional supply. A low fear and greed index Spooked the market, all these factors sent prices down across the board,” he said in emailed comments.

Aguilar added that once prices fell, that resulted in more bitcoin sales, which led to a boom in the digital currency.

Julio Moreno, head of research for CryptoQuant, also spoke, offering a different perspective on the situation.

“Prices fell mostly due to selling/profit-taking by large investors (whales) and mid-sized miners,” he said via Telegram.

“Sales from Mt Gox and other entities (the German government) are relatively small compared to the overall pool of money in bitcoin,” Moreno added.

“Several on-chain metrics signaled oversold territory after prices reached $53K, causing them to bounce back sharply. For example, traders’ unrealized profits turned negative following the collapse of FTX. Not seen since.

He added the chart below, which leverages crypto-quant data, to illustrate these developments.

Moreno also stressed that the amounts seized by the US and German governments represent a very small fraction (about 1.6%) of the total value of Bitcoin.

The difference can be seen using the following chart:

Going forward, the Mt Gox sale may not be as big for cryptocurrency markets as some might think, said Enniking, who noted that investors who get their bitcoins back may not Will not sell immediately.

“Unless one assumes that all Mt. Gox BTC recipients are idiots,” “they won’t all immediately dump their long-awaited BTC immediately upon receipt – and since they waited 10 years Done, so what’s another two months to wait for the price to recover?” They said.

“So, at some level, BTC is clearly oversold and, apparently, the market believes that level is higher than the mid-50s,” Enniking claimed.

“Regardless, once BTC actually splits and the sky miraculously fails to fall, BTC will enjoy a quick and very healthy recovery!” He prophesied.

Disclosure: I have some Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS and SOL.

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