Bitcoin’s value fell below $59,000 (£46,286) on Thursday as several factors exacerbated selling pressure on the digital asset. Bitcoin (BTC-USD) lost 3.9% in 24 hours and was changing hands for $58,770 at the time of writing.
Other cryptocurrencies, Ether (ETH-USD) and Solana (SOL-USD), continued to fall, declining 4.6% and 7.3%, respectively. According to Coingecko data, the global cryptocurrency market cap now stands at $2.28 trillion, down 4.1% from the last day.
Bitcoin liquidations rising sharply
The recent Bitcoin price drop has been exacerbated by a surge in long liquidations. Futures traders betting that the price of Bitcoin and other cryptocurrencies will rise have lost over $240 million in the past 24 hours, according to CoinGlass data.
Bitcoin futures saw over $61 million worth of long liquidations, while the cryptocurrency market as a whole saw over $247 million (£193.66 million) in long liquidations. A long liquidation occurs when an investor holding a long position in a financial instrument such as Bitcoin or another cryptocurrency is forced to sell that position. This typically happens in leveraged trading, where the investor has borrowed money to increase their position size and they cannot meet the margin requirements, resulting in the closure of the position to avoid further losses.
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Liquidations occur when an exchange forcibly closes a trader’s leveraged position due to a partial or complete loss of the trader’s original margin. This happens when a trader cannot meet the margin requirements on a leveraged position and does not have sufficient funds to keep the trade open.
Bitcoin is affected by several selling pressure factors
Several factors have emerged in the past week that are increasing selling pressure on Bitcoin, most notably the announcement by Mt. Gox’s trustee that creditors of the defunct exchange will receive repayments totaling approximately 142,000 Bitcoin starting this month.
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Investors remain cautious about the possibility that Mt. Gox creditors could begin selling their redistributed bitcoins on exchanges after waiting over a decade to do so. Around 127,000 Mt. Gox creditors are owed over $9.4 billion worth of bitcoins. Many investors fear this could lead to many creditors dumping their shares after a decade of untouched gains.
According to data from Lookonchain, an unidentified whale transferred 1,723 Bitcoin worth over $168 million to Binance in the last 24 hours. This transfer to the largest crypto exchange could indicate that this company is looking to sell and lock in profits.
Read more: Bitcoin price falls ahead of FTX and Mt Gox bankruptcy payouts
Still, Mt. Gox’s $9 billion could be offset by institutional inflows into U.S.-based spot bitcoin ETFs (exchange-traded funds). According to Dune Analytics, these ETFs have accumulated over $52.5 billion in bitcoin since their launch in January this year.
Spot Bitcoin ETFs record net outflows
However, the 11 spot Bitcoin ETFs in the U.S. saw a total daily net outflow of $20.45 million on Wednesday. Only two funds saw net inflows, while the remaining nine funds saw no inflows at all.
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Grayscale’s GBTC reported daily net outflows of $26.99 million, partially offset by net inflows of $6.55 million to Fidelity’s FBTC, according to data from SoSoValue. The other nine ETFs, including BlackRock’s IBIT, had zero net inflows.
On Wednesday, the 11 Bitcoin funds recorded trading volumes of around $800 million, compared to $995 million on Tuesday. This latest trading volume is significantly lower than in March, when daily volumes were between $8 billion and $10 billion. Since their launch in January, these ETFs have amassed a total net inflow of $14.62 billion.
German government transfers confiscated bitcoins to crypto exchanges
Meanwhile, an analysis by Arkham Intelligence found that the German government recently transferred $24 million worth of seized bitcoins to cryptocurrency exchanges Kraken and Coinbase.
These Bitcoin transfers originated from a wallet of the Federal Criminal Police Office (BKA) and could be linked to the BKA’s seizure of almost 50,000 Bitcoins from a film piracy website in 2013.
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Data from Arkham Intelligence suggests that these transfers follow previous movements of $195 million worth of bitcoins to exchanges last week. In total, over $425 million was moved through the wallet linked to the BKA last week.
The transfers to exchanges could indicate an intention to liquidate some of the assets, which could potentially further increase the downward pressure on the digital assets.
Read more: What is a spot Bitcoin ETF and why did it spark a crypto rally?
Another selling pressure point has emerged as the US government recently sent 3,940 bitcoin to cryptocurrency exchange Coinbase, according to data from Arkham Intelligence. The data suggests that the bitcoins were seized from Banmeet Singh, a convicted drug trafficker, in early 2024.
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