Bitcoin sinks to a fresh session low, down 4.5%. Eyes on the May low and Mt Gox

July 4, 2024 4:38 pm

The main line of thinking on bitcoin is that the recent round of selling pressure is related to the distribution of the 141,000 bitcoin from the Mt. Gox bankruptcy. It’s hard to imagine that was 10 years ago but at the time bitcoin was trading at around $600.

It will likely turn out that holding assets in an exchanged that was hacked for as much as 950,000 bitcoin will turn out as one of the greatest investments of all time. At today’s price of 57,350, that’s a return of nearly 10,000%.

The question is: What will the former users do? The market appears to be betting that some liquidation is coming. The bitcoin to be distributed represent 0.7% of outstanding bitcoin, so you would think it could be easily absorbed but many times in BTC, narrative matters more than price action.

The distributions start in early July and so there should be an opportunity to buy before month end.

Technically, the level to watch is the May 1 low at $56,483. A break of that would put bitcoin back at the lowest since early March and could invite heavy selling.

bitcoin daily

The other line of thinking on bitcoin is that this latest dip is a sign of waning risk appetite. There has been a strong correlation between bitcoin and tech stocks — particularly NVDA — in the past year. That’s disconnected recently with the Nasdaq closing at a record high yesterday.

Could this be something of a canary in the bitcoin mine? I do believe in this correlation so either bitcoin will have to catch up, or the Nasdaq will need to falter in fairly short order.

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