Bitcoin’s price plummeted to around $57,000 per coin on Thursday, reaching a two-month low following the release of minutes from the U.S. Federal Reserve’s June meeting. The minutes indicated that the central bank is not yet prepared to reduce interest rates. At approximately 2:30 p.m. London time, the digital currency experienced a 5% decline over 24 hours, dropping to $56,837. This marked the first time since May 1 that Bitcoin fell below the $57,000 threshold, as reported by data from CoinGecko.
The Federal Reserve’s decision not to lower interest rates until further data demonstrates sustainable progress toward the central bank’s 2% inflation target has negatively impacted Bitcoin. Higher interest rates are generally considered less favorable for cryptocurrencies, as they diminish investor risk appetite. The reluctance of the Federal Reserve to adjust the interest rates exerted downward pressure on Bitcoin’s value, driving it below $57,000.
Although Bitcoin surged to an all-time high of over $73,700 in March following the approval of the first U.S. spot bitcoin exchange-traded fund (ETF) by the Securities and Exchange Commission, its price has fluctuated between approximately $59,000 and $72,000 since then. The recent pressure on Bitcoin has been compounded by news of Mt. Gox, a collapsed bitcoin exchange, preparing to distribute around $9 billion worth of coins to users. This impending selling action has further weighed on Bitcoin’s performance in the market.
The German government recently auctioned approximately 3,000 bitcoins, valued at around $175 million based on current prices. These bitcoins were seized in connection with the movie piracy operation Movie2K. The assets were transferred to various crypto exchanges and wallets, indicating potential utilization for institutional services or over-the-counter transactions. Additionally, a small amount of Bitcoin was moved from wallets linked to Mt. Gox, with the largest transaction amounting to $24. The purpose of this transfer in relation to Mt. Gox’s repayment plan remains unclear.
Despite the current challenges faced by Bitcoin, analysts from CCData have revealed their belief that Bitcoin has not yet reached the peak of its current appreciation cycle. They anticipate that Bitcoin is likely to achieve a new all-time high, driven by historical market trends surrounding Bitcoin’s “halving” event. The reduction in the supply of new bitcoins to the market following the halving event typically precedes a period of price growth lasting between 12 to 18 months before reaching a cycle peak.
Renowned Bitcoin bull Tom Lee expressed his confidence in Bitcoin’s potential, predicting that Bitcoin could reach $150,000 despite the challenges posed by Mt. Gox’s planned distribution of tokens to creditors. Lee anticipates a significant rebound in Bitcoin’s value in the second half of the year once the impact of Mt. Gox’s disbursement diminishes. Fundstrat Global Advisors’ co-founder and head of research remains optimistic about Bitcoin’s long-term prospects in the evolving market landscape.
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