Bitcoin falls to two-month low

Bitcoin (BTC) fell to its lowest price since early May today, extending its 24-hour loss to nearly 5%. Currently, each unit of this digital currency is around 57,000 USD. Other digital currencies such as Ether, Binance Coin, Solana, XRP also decreased by 5% or more.

The market was red as a series of sell-off orders were issued. The main cause was the collapse of the Mt. Gox exchange and the massive Bitcoin sale by the German government.

Mt. Gox went bankrupt with about $9 billion in Bitcoin under management. Now, they have begun refunding assets to about 20,000 customers. While this is good news for users of the exchange, it still creates a lot of psychological pressure when a large basket of goods is released to the market.

Meanwhile, German public authorities have been selling cryptocurrencies continuously. Recently, the German Federal Criminal Police Office transferred more than 75 million USD to exchanges. In total, the government has transferred 175 million USD in Bitcoin to different wallets.

“One of the top reasons for Bitcoin’s price drop is the German sell-off, which triggered selling sentiment in the market,” said Lucy Hu, senior analyst at cryptocurrency investment firm Metalpha.

Beyond sentiment, another factor holding BTC back is US interest rates. As interest rates fall, the appeal of riskier investments like cryptocurrencies increases. Minutes from the US Federal Reserve’s recent meeting showed policymakers were reluctant to raise interest rates until they had more data to bolster their confidence that inflation was moving toward their 2% target.

However, analysts advise investors not to be too pessimistic. They can see this as a buying opportunity because improved regulations around cryptocurrencies and cooling inflation in the US have not yet been fully priced in. These are likely to provide strong momentum as investors shift their focus to the long term.

Still, BTC’s decline has continued for three consecutive days. The current price has fallen below the 200-day simple moving average (SMA) – an indicator of an asset’s long-term trend. The indicator is calculated by averaging the closing prices over the past 200 days.

The market is trading below the 200-day SMA, which is considered a downtrend. Therefore, according to Alex Kuptsikevich, senior market analyst at FxPro, the price could slide to as low as $51,500 in the short term.