Bitcoin’s price faced a decline on Thursday amidst prevailing negative sentiments in the cryptocurrency sector, exacerbated by the German government’s increased token liquidation.
The BTC token plunged to $59,918, marking its lowest point since May 1st, and officially entering a technical bear market with a 20% drop from its peak earlier in the week.
Peter Schiff, a prominent figure in finance known for his skepticism towards Bitcoin, reiterated warnings about its volatility. In a recent post, he cautioned that the cryptocurrency could sharply decline if it fails to maintain crucial support levels.
Schiff, renowned for advocating investment in gold as a hedge against the US dollar, has maintained a steadfastly pessimistic stance on Bitcoin.
Analyzing recent data, $56,534 has been identified as a critical support level. This price marks the neckline of a quadruple top pattern at $71,780 and aligns with the 200-day moving average. A breach of this support could potentially lead to further drops, targeting psychological thresholds at $50,000 and subsequently $44,000.
The sell-off of Bitcoin accelerated following reports that the German government continued its divestment from the cryptocurrency. Transferring 3,000 coins to platforms like Bitstamp, Coinbase, and Kraken, this move represents a tranche valued at over $174 million at current market rates. Germany now holds 40,359 coins valued at over $2.3 billion, signaling further likely liquidations.
In addition to governmental actions, signs of capitulation among Bitcoin miners have emerged, with industry observers noting that these entities are likely to sell off holdings in response to market resistance.
Further complicating Bitcoin’s outlook, there are indications that the US government plans to sell Bitcoins valued at over $9 billion, linked to the collapse of the Mt.Gox exchange in 2014.
Against this backdrop, data highlights a continued rise in Bitcoin balances on exchanges in recent days, posing additional risks to market stability.
Political developments in the US also weigh on market sentiment, with speculation that Joe Biden may step down and be replaced by a more crypto-friendly candidate such as Kamala Harris, Gretchen Whitmer, Gavin Newsom, or Michele Obama. These contenders are perceived as having a stronger chance than Donald Trump in accommodating cryptocurrency interests.
Meanwhile, Bitcoin’s open interest in the futures market has shown persistent declines, further underscoring bearish sentiment in the cryptocurrency’s trading environment.