(Kitco News) – After spending the early part of the week oscillating around the $60,000 level, Bitcoin broke definitively through support at around 9:00 p.m. EDT Wednesday evening, beginning a sustained slide for King Crypto that unfolded as traders in the United States celebrate the July 4th holiday.
The top crypto pierced the $57,000 level several times on Thursday, falling as low as $56,750 shortly after 9:30 a.m. EDT.
After one final dip below $56,900 around 10:30 am EDT, the bulls took over and marched Bitcoin higher throughout the afternoon, managing to lift it back into the middle of its daily range.
BTC last traded at $58,158.80 at the time of writing for a loss of 3.30% on the 24-hour chart.
Seized tokens and AWOL U.S. weigh on Bitcoin
Analysts at Secure Digital Markets pointed to multiple governments’ movements of seized Bitcoins and the absence of U.S. liquidity as factors in BTC’s drop on Thursday.
“Three wallets linked to Mt. Gox conducted two small Bitcoin transactions today, including sending funds to one of the five exchanges designated for creditor repayments,” they wrote. “According to Arkham Intelligence, these movements involved just $24 worth of Bitcoin. The funds were transferred to Bitbank, one of the exchanges facilitating the $9 billion repayment. This may have been a test transaction, as the main repayments are expected to start in early July.”
They noted that these tests were a precursor for the much larger transactions to come, and that previous moves have already cost governments a fortune in unrealized gains.
“Germany and the US have recently sent $737.6 million in Bitcoin to exchanges like Coinbase, Bitstamp, and Kraken,” SDM wrote. “Germany's transactions account for about three-quarters of this total, involving 7,828 BTC in 30 transactions, primarily in the mornings. While some of the Bitcoin has been returned to original addresses, Germany's transfers, believed to be their first, are part of liquidation efforts from seized assets, including from Movie2k.”
“The US, previously selling Bitcoin at auction, sent 3,940 BTC to Coinbase Prime worth $241.22 million, linked to a drug dealer's assets,” they added. “The US has liquidated nearly $590 million in Bitcoin since November 2020, missing out on an estimated $370 million by selling early. Additionally, the US has sold $49.1 million in ETH and $2.6 million in DAI since September 2020, missing nearly $310 million in potential gains. Combined, the US and Germany have directed $1.14 billion in seized crypto assets to exchanges over four years, with the US still holding about $13.3 billion in crypto assets.”
SDM analysts noted that Bitcoin broke through key levels of support today, but it’s still positioned to reestablish its uptrend.
“BTC has now dipped below the critical 200-day moving average for the first time since October, suggesting a potential downtrend in the upcoming months,” they wrote. “This technical indicator's psychological impact will be underscored if BTC prices close the trading session below the 58,500 mark. However, if prices manage to end the day above this level, bullish sentiment may find short-term relief.”
They said bulls still have an opportunity to regain control over the market with support from the rising trendline connecting the October and January lows. “A break and close below these technical levels could trigger bearish implications, potentially driving prices down to $52,000,” they said.
SDM also noted the absence of significant activity in the U.S. BTC ETF sector. “Over the past two days, there were outflows amounting to $34.2 million, despite Monday's inflow of $129.5 million following a rebound.”
Altcoins drown in a sea of red
The altcoin market was a sea of red as Bitcoin’s weakness and the absence of American dip buyers added up to steep losses across the sector, with only three tokens in the top 100 posting daily gains in excess of 1.00% on Thursday.
Daily cryptocurrency market performance. Source: Coin360
Fasttoken (FTN) led the gainers with an increase of 3.97% on the 24-hour chart, followed by Pendle (PENDLE) which rose 2.96%, and Elrond (EGLD), which gained 1.91%.
Fellaz (FLZ) led the losers with a decline of -13.64%, followed by a -13.36% drop for Beam (BEAMX) and a fall of -13.22% for Core DAO (CORE).
The overall cryptocurrency market cap now stands at $2.13T, a 3.39% decrease over the last day, and Bitcoin’s dominance rate is 53.79%.
