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Bitcoin rebounds above $60k despite 30 per cent drop and massive sell-offs in June and July
- Bitcoin has had a rough June and July, with its price falling from its all-time high by nearly 30%.
- A huge sell-off has been a major contributor to the crypto's plummeting value.
- Victims of the 2014 Mt. Gox hack are finally being repaid in July, bringing hundreds of thousands of Bitcoin and Bitcoin Cash into supply.
- At the same time, German State authorities liquidated over AU $3b worth of Bitcoin seized from an illegal pirating ring.
- Despite the supply shock, Bitcoin has already rebounded above US $60k, as Mt. Gox repayments slow and the German sell-off finishes.
Crypto and volatility go together like bread and butter. Even if you don't follow the market, no doubt you've seen the stories of millionaires made and broken overnight. Wild price swings in a matter of hours are just par for the course for seasoned investors.
Bitcoin raced off to a stunning start in 2024, raking in support from governments around the world to hit a new all-time high in price. But after reaching the summit, the cryptocurrency has endured an icy past month, dropping in value by over US $10,000 (AU $14,750) since then.
So, is this onslaught a sign of things to come, or is it just the market evening out after an impressive beginning to the year? To find out, we must first look into what's causing the current dip in price.
A decade on from the crypto hack that shaped the industry
Given the blockchain world's rocky history, it's easy to dismiss sudden price falls as just the crypto market doing crypto market things. But in reality, there are a few very clear reasons behind Bitcoin's late poor performance.
Let's travel back in time a decade. It's 2014, and Bitcoin is starting to make a name for itself among tech-savvy investors. The cryptocurrency has evolved from being practically worthless to investors snaffling it up for over AU $1,000.
Times are different now. There are hundreds of reputable Aussie crypto exchanges like CoinJar and Swyftx to choose from. But back then, your options were limited to a handful, with the biggest of a small bunch being Japanese trading platform Mt. Gox.
At its peak, the Mt. Gox exchange was responsible for nearly 75% of all Bitcoin trading, and the industry was gearing up to take the world by storm.
But in February 2014, disaster struck. Mt. Gox's security measures were compromised, and estimates suggest a whopping 700k BTC was stolen from customers. At the time of writing, this is worth approximately AU $64 billion. That's a fair whack to even established industries, let alone crypto, which was in its infancy.
The result was a decade-long bankruptcy proceeding to reclaim as many lost assets as possible and compensate customers.
And after ten long years of waiting, July 2024 saw Mt Gox victims get their first payouts since the catastrophic hack.
While Mt. Gox customers were celebrating like it was their birthdays, the rest of the crypto market was a little more concerned. You see, victims had been waiting for what seemed like an eon to get their money back. Chances are, a significant number of them would immediately sell any crypto returned to them, flooding the market with Bitcoin (and Bitcoin Cash) and putting downward pressure on the cryptocurrency's price.
So, before this could happen, several big-pocketed investors sold their own Bitcoin holdings to avoid a pending crash...which in itself caused the crash they wanted to avoid.
German authorities liquidate billions of Bitcoin following criminal raid
As it turned out, this mass sell-off was only the beginning. To make matters more complex, earlier this year German State authorities had seized approximately 50,000 BTC of their own from an illegal movie pirating operation - worth over AU $3b.
Due to local laws, assets acquired from a criminal investigation must be sold. So, that's exactly what the Germans did, steadily liquidating thousands of Bitcoin throughout June...around the same time the Mt. Gox news dropped.
From out of nowhere, Bitcoin was facing a sell-off crisis. Billions of dollars worth of Bitcoin were new available on exchanges around the world - and nowhere near enough investors were picking up the slack.
The result?
The price of BTC sunk to as low as US $52.7k (AU $77k), a fall of nearly 30 per cent in just over a month.
Bitcoin already on the up as dust settles from sell-off
The thing is, Bitcoin's price drop was rather predictable once it emerged the mass sell-off was coming. And while some of the market moved to panic stations at the first sign of trouble - recent investors like BlackRock, Invesco, and even Donald Trump have endorsed Bitcoin with a sense of calm. The big financial players were holding their ground, and once Germany and Mt. Gox finished selling Bitcoin, things would settle.
Sure enough, it didn't take long for Bitcoin to fight back. In the past week, BTC has rallied back to US $64k (AU $95k), an increase of 18 per cent.
Nobody can say for sure whether this uptrend will continue. It's possible the market still needs time to truly relax after being pumped with new supply.
But we do know one thing - Bitcoin is growing in resilience, and it will take more than a four-week rough patch to knock off the king of cryptocurrency.
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This is branded content. The information is general in nature and is for educational purposes only. We do not provide financial advice nor does this article take into account your personal financial situation. We encourage you to seek financial advice from an independent financial advisor where appropriate and make your own inquiries.