The world’s biggest cryptocurrency was nursing a 15% slump over the past month, and remained on the cusp of a bear market as fears of increased token supplies battered markets.
Bitcoin added just 0.1% in the past 24 hours to $58,549.6 by 08:09 ET (12:09 GMT). The token saw limited relief from some bargain buying this week.
Defunct crypto exchange Mt Gox remained a key point of contention for Bitcoin, after the trustees of the exchange said they had begun returning tokens to clients affected by a 2014 hack.
It was immediately unclear just how much this distribution will entail. But wallets linked to the exchange were seen mobilizing about $9 billion worth of tokens earlier this year.
Additionally, the German government was also seen offloading Bitcoin confiscated from a piracy website, and could potentially hold at least $2 billion worth of tokens.
Sharp declines in Bitcoin’s price brewed concerns that major Bitcoin miners could begin selling some of their holdings to break even, especially after Bitcoin’s halving reduced miner rewards earlier this year.
Bitcoin still remained above four-month lows hit earlier in July, as recent price declines attracted a slew of bargain buying into the token.
Capital inflows into Bitcoin investment products, particularly exchange-traded funds, grew over the past week, helping inspire some confidence in the currency. This also kept Bitcoin’s price off recent lows.
Sentiment towards crypto ETFs is likely to improve in the coming weeks, especially as the Securities and Exchange Commission prepares to make a key decision on spot ETFs for world no. 2 token Ether.
Among broader cryptocurrency prices, major altcoins were trading largely in the green.
Ether climbed 1.3% to $3,149.32, while XRP added 2%. ADA rose 3%, while SOL added 0.5%. Among meme tokens, DOGE and Investing.com Shiba Inu Index remained largely flat.
Improving optimism over U.S. interest rate cuts dented the dollar, but still provided little support to crypto prices. Fed Chair Jerome Powell flagged more progress in bringing down inflation, but warned that the central bank still needed more confidence to cut interest rates.
Focus was now squarely on key consumer price index data, due later on Thursday, for more cues on rates.
The speculative fervor in the crypto markets that ensued during the first quarter has dissipated, suggesting a potential resurgence in Bitcoin prices.
According to Capriole Investment’s crypto speculation index, which tracks the percentage of altcoins with 90-day returns greater than Bitcoin, has dropped below 10%, significantly lower than its January peak of nearly 60%. Bitcoin reached new record highs above $70,000 in the first quarter but has since cooled to $58,000.
Speculative washouts act as corrective mechanisms, realigning asset prices with fundamentals and reducing excessive speculation, leading to a healthier long-term market environment.
Historically, a below-10% speculation index has marked the start of significant Bitcoin rallies, as seen in the first half of 2019, late 2020, and the second half of 2023.
Source: Cryptocurrency - investing.com
