Bitcoin drops below $59,000 amid Mt. Gox payout concerns, US economic uncertainty

Bitcoin's value dipped below $59,000 on Thursday, currently trading at $58,827, according to The Block’s bitcoin price page. The cryptocurrency has shed 3.38% in the last 24 hours to reach its lowest levels since early May, despite market anticipations of a price rebound.

“The fall below the $60,000 resistance line is significant as it marks a psychological barrier for many investors,” said Rachael Lucas, crypto analyst at Australia’s BTC Markets exchange. “If bitcoin remains below this level, we could see increased volatility in the short term.”

The cryptocurrency’s recent volatility has been largely attributed to the imminent payout for creditors of collapsed cryptocurrency exchange Mt. Gox, who are expected to receive around 142,000 BTC, worth about $9 billion, starting in July. Lucas explained that the significant repayment in bitcoin will add “substantial selling pressure” to the market as it absorbs the additional supply.

Investor uncertainty surrounding U.S. inflation and interest rates also continues to weigh on crypto prices. Federal Reserve Chair Jerome Powell recently said that there is still more work needed on taming inflation, though he acknowledged that there has been a fair amount of progress. 

While investors looked forward to two or more interest rate cuts this year, the Fed said it considers only one reduction in borrowing costs for the rest of this year. “[This] has contributed to a risk-averse sentiment among investors,” BTC Markets’ Lucas said.

Analysts from QCP Capital and Coinbase previously noted that July could see bitcoin rebound, pointing to the positive seasonality the cryptocurrency has experienced historically. On Monday, bitcoin had risen to a high of $63,500.

“Although many analyses predict a significant rise in July, we believe that due to the lack of market liquidity and the absence of new narratives in the crypto sector, it is difficult to see a notable increase without the major benefit of interest rate cuts,” Bit.com Chief Marketing Officer Toya Zhang told The Block.

Zhang added that a lot of over-the-counter desks are receiving big sell orders, which indicates that family offices and high net-worth individuals are taking profit from the last bull cycle. 

Spot bitcoin exchange-traded funds in the U.S. have recently seen trading volumes fall to lower levels, with the volume dropping to around $800 million on Wednesday.

“In the coming week, I expect bitcoin to continue experiencing volatility as the market digests the Mt. Gox repayments and responds to broader economic signals,” Lucas said. “If market liquidity remains strong, we might see bitcoin rebound as it has in the past after significant selloffs.”