Bitcoin (BTC) traders expect prices to fall as low as $50,000 in the coming weeks, a level not seen since mid-February. The largest cryptocurrency by market cap could face billions of dollars in selling pressure as a result.
Data from CoinGecko shows that BTC prices have dropped by more than 10% over the past seven days. under a critical technical indicator on Thursday, wiping out all gains since late February.
Trading firms such as QCP Capital have attributed the pessimistic sentiment to wallet activity from a German government agency and the defunct crypto exchange Mt. Gox, and some market analysts say more pain is on the horizon.
“Bitcoin selling pressure is unlikely to subside in the coming days,” Rachel Lin, founder of on-chain crypto exchange SynFutures, said in an interview. “The German government still holds over $2.3 billion in Bitcoin, Mt. Gox holds over $8 billion, and the U.S. government holds over $12 billion.”
“The market expects most Mt. Gox users to dump their tokens, but we could see a rebound if selling is lower than expected. On the other hand, if there is enough selling to push the price down, we could be looking at the $50,000 level soon,” she said.
Alex Kuptsikevich, senior market analyst at FxPro, expressed this sentiment in an email to CoinDesk: “Bitcoin dropped below the 200-day moving average and has so far failed to break above it. It is trying to stay within the established patterns.
“From the current position, a further decline to $51,000 (February consolidation area) is more likely than the same amount of growth to $65,000,” Kuptsikevich added. Moving averages are a measure of an asset’s closing prices over a time frame that can help identify a trading opportunity.
Additionally, a wallet affiliated with Germany’s Federal Criminal Police Office (BKA) has been moving millions of dollars’ worth of bitcoin to crypto exchanges since mid-June. Traders say the moves imply they plan to sell the assets, which were forfeited in 2013, on a piracy marketplace.
Meanwhile, BTC prices appeared to briefly recover mid-morning in Europe, rising from a low of $53,600 in the early Asian hours to nearly $55,000. The sudden drop had seen more than $550 million in crypto longs, or bets on higher prices, liquidated in the past 24 hours.