Bitcoin Below $60,000: Is the Short-Lived Rally Over?

Bitcoin (BTC), the world’s leading cryptocurrency, has fallen back to the $60,000 mark, raising concerns of a potential deeper slump in the coming days. This decline comes after a brief period of optimism at the start of July.

According to market data, Bitcoin dropped nearly 5% over the past 24 hours, settling at $60,000. Traders are now watching for signs that could indicate further selling pressure. While $60,000 has historically acted as a support level for Bitcoin, some analysts fear a steeper drop.

Earlier in June, Bitcoin surpassed expectations by reaching around $63,000, fueled by positive changes in macro liquidity. Analysts like Rekt Capital even predicted a climb to $71,000 based on correlations with USD liquidity. “[It’s the] Biggest Fed Net Liquidity rate-of-change spike in 15 months,” commented market analyst Cole Garner. “Last time that happened, bitcoin rose 40% in one week. Not assuming a repeat, but you love to see it.”

However, these positive sentiments were short-lived. The recent decline has prompted various explanations. A popular theory points to the upcoming distribution of $9 billion worth of Bitcoin to Mt. Gox creditors. Some analysts believe these creditors will trigger a sell-off upon receiving their assets, driving prices down. This theory is supported by the significant gains Bitcoin has made since the 2014 Mt. Gox hack, similar to the recent sell-off following Gemini’s payout to creditors.

Beyond Mt. Gox, uncertainty surrounding potential US interest rate hikes is also weighing on Bitcoin. The Federal Reserve is expected to make official statements on Wednesday, which could further impact the market.

Several on-chain indicators, such as net unrealized profit and loss (NUPL) and SOPA (Spent Output Profit Ratio), are suggesting a potentially gloomy July for Bitcoin.

Bitcoin’s slump appears to be dragging down the broader cryptocurrency market. Leading altcoins like Ethereum (ETH) and Bitcoin Cash (BCH) also experienced losses in the past 24 hours. The overall market capitalization for cryptocurrencies currently sits at $2.26 trillion. Interestingly, despite the decline in prices, daily trading volumes have actually increased by 6.16%. Notably, some altcoins like Solana (SOL) and XRP have managed to stay afloat, potentially benefiting from recent regulatory and legal developments.

It remains to be seen whether Bitcoin can rebound from this latest dip or if a more significant correction is on the horizon. The upcoming Federal Reserve statement and the potential Mt. Gox sell-off are key factors to watch in the coming days.