Bitcoin's Price Plummets to $61,000: Key Factors Behind the Recent Decline

In the past 24 hours, the cryptocurrency market has experienced a significant downturn. Major tokens, including Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), and Solana (SOL), have all seen sharp declines. This market slide has led to over $150 million in bullish bets being liquidated.

• Major cryptocurrencies experienced a sharp decline of up to 7.5% in the past 24 hours, affecting Bitcoin, Ethereum, Cardano, and Solana.

• Bitcoin's 3% price drop led to over $150 million in bullish bets being liquidated, causing widespread market concern.

• The decline is attributed to large sales from Bitcoin miners and the German government moving significant amounts of BTC to exchanges.

• Bitcoin prices are approaching critical support levels, indicating potential further declines if these levels are breached.

Bitcoin has been at the forefront of this downturn, losing 3% of its value. This decline has erased the gains made last week, causing concern among traders and investors. The drop in Bitcoin's price is attributed to several factors, including large sales from Bitcoin miners and the German government moving significant amounts of BTC to exchanges.

BTC/USDT price chart | Source: KuCoin

Altcoins Also Suffer

Altcoins have not been spared in this downturn. Ethereum, Cardano, and Binance Coin (BNB) registered similar losses to Bitcoin. Solana's SOL dropped 7%, trading at nearly $120 on Monday morning. Memecoins Dogecoin (DOGE) and Shiba Inu (SHIB) also fell by nearly 5%.

Here’s a look at some of the key factors driving Bitcoin prices lower: 

1. Sales from Bitcoin Miners: Bitcoin miners have been under pressure to sell due to higher breakeven prices post-halving. This has resulted in miner BTC holdings dropping to their lowest level in the past 14 years. Singapore-based QCP Capital highlighted that miner BTC reserves are lower by 50,000 from the start of the year. Miners have been selling due to the higher breakeven prices post-halving. QCP Capital noted that this has led to a significant drop in miner BTC holdings, contributing to the market decline.

2. German Government's BTC Sales: The German government allegedly sold around 3,000 BTC recently, with plans to sell another 47,000. This large pool of supply entering the market has spooked investors, contributing to the market decline. The German Federal Criminal Police Office (BKA) moved tens of millions worth of BTC to exchanges like Coinbase and Kraken last week. This move has created additional downward pressure on the market.

3. Whale Activities: Bitcoin whales, entities with large holdings of the coin, sold over $1 billion worth of BTC in the first two weeks of June. This activity has added to the market's bearish sentiment.

4. Broader Market Sentiment: The overall market sentiment has been negatively impacted by these movements, causing a broader sell-off. The CoinDesk 20, which tracks major tokens minus stablecoins, slumped just over 4%.

5. Impact on Liquidations: The market's sharp decline has resulted in significant liquidations. Over $150 million in bullish bets (long positions) were liquidated, while bearish bets (short positions) saw a smaller $9 million in losses. Liquidation occurs when an exchange forcefully closes a trader's leveraged position due to a loss of the trader's initial margin.

Read more: MicroStrategy Buys 11,931 BTC More, Total Bitcoin Holdings Worth Around $15B

Bitcoin is now heading toward crucial support levels, including the psychological support level of $60,000 and the 200-day exponential moving average (200-day EMA) at around $58,000. Market analysts are closely watching these levels to gauge Bitcoin's next move.

Market analysts have varying predictions for Bitcoin's price movement. Some believe Bitcoin may find support around the $60,000 level, while others predict further declines to $50,000. Independent market analyst Teddy Cleps anticipates a slide toward $61,000, citing historical support at the 21-weekly EMA.

Bitcoin price chart exhibits double top pattern | Source: 10x Research on X

Bullish Scenarios: Despite the current bearish sentiment, some analysts remain optimistic. Michael Novogratz of Galaxy Digital Holdings predicts that Bitcoin will trade within the $55,000-75,000 range throughout Q2 2024. He believes new market events could drive prices higher after the current stagnation.

Read more: Bitcoin Price Prediction 2024

The recent market downturn has highlighted the volatility and sensitivity of the cryptocurrency market to large-scale movements and external factors. While Bitcoin and other major tokens have experienced significant declines, the market's next move will depend on how it reacts to key support levels and upcoming economic data. Investors and traders should remain cautious and closely monitor market developments in the coming days.