Bitcoin at four-month low: Why is the crypto market down despite market high?

Bitcoin Price: Early on July 5, Bitcoin slumped over 8 per cent to $53,523, in what traders noted was below chart support of $55,000, and to its four-month lowest price since February 2024, Reuters reported.

Further, the world's largest cryptocurrency in terms of market cap shed some of its 12 per cent weekly gains, even as world markets signalled green.

Besides Bitcoin, Ether was also down 9 per cent — a two-month low for the crypto. Other smaller coins, such as Cardano and XRP, also clocked losses exceeding 10 per cent, as per Bloomberg.

Points of Concern

Traders had anticipated the dumping of long-lost tokens from Mt. Gox, a defunct Japanese crypto exchange, which media reports said would return Bitcoin to creditors and further “spooked” selling from leverage players, the Reuters report added.

Mt. Gox collapsed in 2014. There are fears that the $8 billion worth of tokens being released in stages would drive more selling. The Bloomberg report cited Arkham Intelligence to note that a Mt. Gox-linked wallet alone moved $2.7 billion worth of its tokens on July 5.

“The selling pressure is still related to creditor selling from the failed Mt Gox exchange. However, the acceleration to the downside suggests the market is trying to get ahead of the creditor flows,” Tony Sycamore, a market analyst at IG, told Reuters.

There is also uncertainty over the Democrats replacing Joe Biden as their presidential nominee with someone less crypto-friendly. The Reuters report added that the early boost from US-based Bitcoin exchange-traded funds (ETFs) also seems to have petered out. Bitcoin had touched a record $73,803.25 in March on the back of Bitcoin ETF.

On a likely up chance, Stefan von Haenisch, head of trading at OSL SG Pte, told Bloomberg that the crypto market needs “more dovish notes on monetary policy from the Federal Reserve” and that “one to two rate cuts, coupled with Fed balance sheet expansion, are two key ingredients that crypto is really waiting for.”

The Bloomberg report also noted that investors are awaiting job data to gauge the Fed's likely move.

(With inputs from Reuters and Bloomberg)