Bitcoin prices rise nearly 6% after hitting lowest level since February

Bitcoin prices rebounded today after falling to their lowest level in more than four months amid weak market conditions.

The world's most prominent digital currency reached $56,856.61 this afternoon, according to data from CoinMarketCap.

At this time, the cryptocurrency had gained more than 5.8%, falling to $53,717.34, its lowest price since late February, shortly after midnight EST, additional CoinMarketCap data showed.

After reaching the aforementioned daily highs above $56,800, the digital asset experienced some volatility but it retained most of the gains it earned earlier today.

Explaining Bitcoin's recent price fluctuations, many analysts said that the digital currency was oversold due to the decline in the last 24 hours.

Several media reports have indicated that the trustee of Mt. Gox has begun making payments to some creditors, which is why the digital currency fell to its lowest level in four months within the last 24 hours.

Tim Enneking, managing partner at Pasalion, commented on the developments but stressed that multiple factors are responsible for the losses in Bitcoin.

“In a market that was already relatively weak following the ATH consolidation, the general summer lull and the SEC teasing the actual launch date of spot ETH ETF trading, concerns about Mt. Gox BTC recipients’ dumping (whether well-founded or not) clearly constituted the proverbial straw that broke the camel’s back and drove spot BTC prices from over $60k to approximately $53k,” he said via emailed comments.

Independent cryptocurrency analyst Armando Aguilar also stressed that several factors contributed to the decline in the digital currency markets.

“When the new supply from the Mt. Gox trustee came to the market, it showed BTC transfers to unknown addresses, and the German government was also ready to unload the excess supply. The low fear and greed index scared the market, all of these factors caused prices to drop across the board,” he said via emailed comments.

Aguilar said that once prices dropped, there was more selling of bitcoin, which led to a rally in the digital currency.

Julio Moreno, head of research at CryptoQuant, also spoke out, offering a different perspective on the situation.

“The drop in prices is primarily due to selling/profit taking by large investors (whales) and mid-sized miners,” he said via Telegram.

“The sales by Mt Gox and other entities (including the German government) are relatively small compared to the total amount of money held in bitcoin,” Moreno said.

“After prices hit $53K, several on-chain metrics indicated oversold territory, which caused them to reverse sharply. For example, traders’ unrealized profits reached negative levels not seen since the FTX collapse.”

He included the chart below, which uses CryptoQuant data, to illustrate these developments:

Moreno also stressed that the funds seized by the US and German governments represent a very small fraction (about 1.6%) of the total value of Bitcoin seized.

The difference can be observed using the chart below:

Enneking said that going forward, the Mt. Gox sale won't be as big a disruption to cryptocurrency markets as some think. He said investors who get their bitcoin back will likely not sell it immediately.

“Unless one assumes that all Mt. Gox BTC recipients are fools,” he said, “they will not all suddenly give up their long-awaited BTC immediately after receipt – and since they have already waited 10 years, what is the point of waiting a few more months for the price to recover?”

“So, at some level, BTC is clearly oversold and, apparently, the market believes that level is in the mid-to-high 50s,” Enneking claimed.

He predicted, “Regardless, once BTC is actually distributed and the sky miraculously stops falling, BTC will enjoy an immediate and very healthy rebound!”

Disclosure: I hold some Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS, and SOL.

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