Bitcoin Must Break $62,000 to Avoid a Downturn

Bitcoin is approaching its lowest level since May 2, with various factors contributing to selling pressure on the leading cryptocurrency. Over the past day, the BTC/USD pair has remained stable, trading at $60,871 (£48,122) on Thursday.

The cryptocurrency has dropped over 10% in August, although it has still seen about a 100% increase year-to-date. However, it remains down more than 17% from its peak of $73,798 in mid-March. Other digital assets, such as Ether (ETH/USD) and Solana (SOL/USD), have also seen minor declines of 0.6% and 0.2%, respectively, in the last 24 hours.

Bitcoin’s performance contrasts with the gains seen in global stock markets this week, with the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC) finishing Wednesday’s session positively. 

Several factors have intensified the selling pressure. For instance, the trustee for Mt. Gox announced that payouts to creditors of the defunct exchange would begin in July, distributing around 142,000 BTC worth nearly $9 billion. Investors are cautious, fearing that Mt. Gox creditors might flood exchanges with their received BTC after waiting over ten years.

US and Germany: Authorities Move BTC to Exchanges

Another factor pressuring the market is that, according to Arkham Intelligence, the U.S. government recently transferred 3,940 BTC to the Coinbase exchange. These BTC were seized from convicted drug dealer Banmita Singh earlier in 2024, leading to market pressure. In January, a court ordered Singh to forfeit over 8,100 BTC to the U.S. authorities. The Drug Enforcement Administration (DEA) described this seizure as the largest in its history.

Additionally, Arkham Intelligence reported that German authorities transferred $24 million in confiscated Bitcoin to cryptocurrency exchanges Kraken and Coinbase. These movements can be linked to a 2013 seizure of nearly 50,000 BTC by the Federal Criminal Police Office of Germany (BKA) from a site involved in movie piracy.

These transfers suggest possible plans to sell some assets, which could further reduce the value of the digital currency.

Growing Demand for Spot Bitcoin ETF Funds

Institutional interest in American spot Bitcoin ETFs is rising after a period of decreased activity. On Wednesday, the net inflow into spot BTC ETFs was $21.52 million, continuing a positive trend from Tuesday. Fidelity’s FBTC fund saw $19 million in inflows, standing out among others. American spot Bitcoin ETFs have shown positive movement for six consecutive days, accumulating about $65 million. BlackRock’s iShares Bitcoin Trust (IBIT) led the way with a $75 million inflow, and the net inflow into Grayscale’s GBTC reached $4 billion, marking the first positive movement since June 5.

Japan Faces a “Black Monday”

On Monday, Japan’s Nikkei 225 (^N225) experienced its most significant single-day drop in history, falling by 4,451.28 points (12.40%) to finish at 31,458.52. This decline surpassed the previous record set on October 20, 1987 (known as “Black Monday”) when the Dow Jones (^DJI) fell 22.6%. Panic selling stemmed from concerns over a potential recession in the U.S., spreading to European and Asian markets, leading to declines of 2-3%.

Global Markets Recover from “Black Monday”

Global markets are recovering after the sharp declines associated with last week’s “Black Monday.” Strong retail sales and unemployment data from the U.S. contributed to this recovery, with the S&P 500 and Nasdaq bouncing back 17% and 19%, respectively. The Nikkei 225 rose by 3.6%, while the S&P 500 saw a 1.6% increase in pre-market trading.

Market Outlook: Breaking $62,000 is Crucial

Analysts at Kraken emphasize the importance of Bitcoin reaching and maintaining the $62,000 level to prevent a drop below $50,000. Currently trading at $60,691, Bitcoin has not seen $62,000 since August 9, 2024. The current price action suggests a corrective pattern rather than a strong bullish trend. Bitcoin is close to the 200-day exponential moving average at $59,500, which will shape its price data going forward. Reaching $62,000 could lead to the liquidation of short positions totaling $1.04 billion, making it a crucial level for analysts and traders monitoring the cryptocurrency’s short-term trajectory.