Bitcoin’s price has taken a hit, dropping by 4.5% recently. Many believe that this sudden drop is due to the distribution of 141,000 bitcoins from the Mt. Gox bankruptcy. It’s hard to believe that this incident happened a decade ago when bitcoin was only worth around $600. Now, with bitcoin trading at $57,350, those who held onto their assets from the Mt. Gox hack have seen a return of nearly 10,000%.
The big question now is what will the former users of Mt. Gox do with their bitcoin? The market seems to think that some users might start selling off their holdings. While the amount of bitcoin to be distributed is relatively small compared to the total supply, the narrative around it can have a significant impact on the price.
The distributions are set to begin in early July, so there may be a chance to buy bitcoin at a lower price before the end of the month. From a technical standpoint, all eyes are on the May 1 low of $56,483. If bitcoin falls below this level, it could trigger more selling and push the price back to its lowest point since March.
Another perspective on bitcoin’s recent dip is that it reflects a decrease in risk appetite among investors. Over the past year, there has been a strong correlation between bitcoin and tech stocks, especially NVDA. However, this correlation has weakened recently, with the Nasdaq reaching a new high.
This divergence between bitcoin and tech stocks raises the question of whether bitcoin is serving as a canary in the coal mine for the broader market. If the correlation between bitcoin and tech stocks is to hold, either bitcoin will need to recover quickly, or we may see a pullback in the Nasdaq soon.
Overall, the current situation in the bitcoin market is complex and influenced by various factors, including the Mt. Gox distributions and the broader market sentiment. Investors will need to keep a close eye on key levels and market dynamics to navigate these uncertain times successfully.