US Federal Reserve (Fed) Chairman Jerome Powell has written stated in Sintra yesterday and continued the moderate tone it has shown recently.
Powell stressed that the Fed needs to be more confident before cutting interest rates, stressing that the 4% unemployment rate is “still very low”, inflation is coming back and he does not see inflation falling to 2% this year or next.
As a result, Bitcoin (BTC) recorded a 4.2% drop in the past 24 hours and lost the important price mark of $60,000.
Source: TradingView
Bitcoin’s weak price action dragged down almost the entire top 100, causing over $300 million in liquidations over the past day, affecting 112,480 traders.
Source: Coinglass
The outlook is not just bleak in the short term following Powell’s remarks.
Ben Kurland, CEO of DYOR, emphasized that deflation is often seen as a favorable indicator, but the Fed has been very cautious about cutting interest rates, suggesting that the agency does not yet consider the current economic environment stable enough to cut interest rates, which could lead to volatility in the cryptocurrency market. Cryptocurrencies often experience price fluctuations in response to overall economic indicators and central bank policies.
Notably, Kurland stated that the Fed’s forecast that 2% inflation will not be achieved this year or next, combined with a huge and unsustainable budget deficit, raises concerns about long-term economic stability.
While an unemployment rate of 4% shows resilience, it also implies that the Fed could maintain high interest rates for longer, which typically dampens investment in riskier assets like cryptocurrencies.
Mt.Gox Pays Off Debt
Additionally, Bitcoin’s drop below $60,000 could also stem from the possibility of Mt. Gox repaying creditors in early July.
The defunct cryptocurrency exchange may have started paying back creditors, based on a chart of Bitcoin transfer volumes for tokens last moved over the past seven to 10 years shared by Charles Edwards, founder of digital asset hedge fund Capriole Investments.
“The entire history of this chart has disappeared because a huge amount of Bitcoin has moved onchain, more than 10 times the previous high. $9 billion. But by whom? Mt. Gox. It looks like those distributions are really coming.”
This chart will blow your socks off and slap you in the face.
The entire history of this chart has disappeared because an enormous sum of Bitcoin moved onchain, 10X more than the previous highs. $9B. But by who?
Mt. Gox.
It looks like those distributions really are coming. pic.twitter.com/ViOudFQasb
— Charles Edwards (@caprioleio) July 2, 2024
More than $9.4 billion in Bitcoin will be returned to some 127,000 Mt. Gox creditors who have waited more than 10 years to get their money back, meaning many investors will cash out after a decade of being untouchable.
However, the $9 billion from Mt. Gox could be absorbed by institutional capital flowing into U.S.-based Bitcoin ETFs, which have accumulated more than $52.5 billion in BTC since their launch in January.
Bitcoin ETF Net Inflows. Source: Dune
Whale dumping
Notably, the actions of a whale or a large Bitcoin holding institution may have caused the Bitcoin price to drop below a psychologically important level.
An unidentified whale sold $180 million worth of Bitcoin in just three minutes – an extremely large amount to sell at market price in such a short period of time.
Zaheer, a well-known industry observer, has detect This big sale is based on the chart below.
BTC/USD, price chart and total funding rate. Source: Zaheer/ X
According to Lookonchain, another anonymous whale deposited 1,723 BTC worth over $168 million into Binance in the past 24 hours, contributing to the sharp price drop.
The whale deposited 1,023 $BTC($62.2M) to #Binance again 45 minutes ago.
The whale has deposited 1,723 $BTC($106M) to #Binance in the past 24 hours.
And the price of $BTC has dropped by ~3% in the past 24 hours.
Address:
1J22CPni1EsmT15A9qveydfWMoPMRw9Lp3 pic.twitter.com/mLuvCSNlAv— Lookonchain (@lookonchain) July 3, 2024
The transfer of Bitcoin whale funds to the world’s largest cryptocurrency exchange suggests the entity is looking to sell and lock in profits.
You can see the Bitcoin price here.
Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do their own research before making any investment decisions. We are not responsible for your investment decisions.
Itadori
Bitcoin Magazine
