By
Steve Muchoki
April 23rd, 2024
The Bitcoin price drop has pushed it down around $55K and market analysts are presenting plausible reasons for this development.
Leading digital currency Bitcoin (BTC) saw a drop below the $56K price level in the early hours of Tuesday morning. This sparked waves of speculative reasoning as analysts began mapping out potential bull and bear scenarios on where the crypto heads next in the long term. Notably, Bitcoin was not the only digital asset to incur a slide. Ether (ETH), the second-largest crypto by market cap, also suffered a 4% retracement. Overall, the total market cap of the crypto marketplace is now down by about 6.7%, at $2.72 trillion.
According to TradingView and Cointelegraph Markets Pro, the BTC slide was the result of strong bearish action after the crypto revisited the $60K+ price level. Many of these traders were looking to capitalize on the surge and make quick gains on their position, hence the several days of shorting. This subsequently led to a sizable price decline back to around $55,600.
Planned Mt. Gox Compensation Scheme Credited as Being Primarily Responsible for Bitcoin Price Drop
ExoAlpha managing partner and chief investment officer David Lifchitz also weighed in on the recent pullback. Lifchitz referenced the Mt. Gox rehabilitation/compensation scheme announcement on November 16th for its creditors as a plausible cause. The now-defunct Japanese crypto exchange plans to disburse up to 145,000 BTC (over $8 billion at the current rate) to retail investors who made BTC purchases between 2013 and 2015. Lifchitz believes that because several of these investors stand to receive a massive influx of BTC sooner or later, they are more likely to cash the token out at any price currently. This is even more likely when because the price of BTC is now several times higher than their original purchase price.
According to Lifchitz, this “will probably hit pretty hard the market when the news of the effective distribution will break”. The ExoAlpha executive doubles down on his stance that a future BTC sell-off might be triggered upon the Mt. Gox compensation exercise. As Lifchitz put it:
“…that Mt.Gox is a Damocles sword above the market’s head, and I don’t see BTC going to $100,000 next month with that threat hanging. Whales have been holding tight but haven’t bought much more. I guess they are well aware of the Mt.Gox upcoming drama and are waiting to load up on the potential upcoming huge dip.”
However, independent market analyst Rekt Capital posits that BTC may very well reclaim a price level at around $58,728 to close out this month. In addition, Rekt Capital backs this assertion with a BTC/USD 1-month chart. The market analyst stated that there are positive indicators surrounding BTC’s price action but still cautioned about impending volatility. According to Rekt Capital, Bitcoin could probably still “see-saw like this” for the rest of the month.
Current BTC Price
As of press time, BTC is currently changing hands at $55,858. Earlier this month, pseudonymous Dutch investor PlanB postulated that he still believes the crypto would hit $100K by the end of the year.