The cryptocurrency market has been facing challenges over the last few days, with Bitcoin leading the way in a significant decline. Bitcoin is currently testing a key support level at around $56,500, while the total market capitalization of cryptocurrencies has dropped by about 5 percent in the past 24 hours, hovering around $2.25 trillion as of early Thursday in New York.
Amidst this turbulent environment, around $300 million has been liquidated from leveraged crypto trading, mostly affecting long traders.
Recent data from Arkham Intelligence has shown that the German government has been actively selling Bitcoin since June 18, transferring nearly 10,000 Bitcoins to various exchanges in the past few weeks. On Thursday alone, the German government sold around 3,000 Bitcoins, valued at approximately $175 million. Currently, the German government holds about 40,350 Bitcoins, worth roughly $2.34 billion, making it a significant player in the market.
Selling pressure has intensified due to whale traders looking to profit, with over 16 percent of Bitcoin holders currently in a losing position. The bearish sentiment may continue, especially in the absence of bullish signs. The upcoming $9 billion Mt. Gox Bitcoin distribution, scheduled to start this month, has also contributed to the mid-term bearish outlook.
As Bitcoin nears its crucial support level around $56,500, many analysts are expecting a potential market rebound. However, if Bitcoin consistently closes below this level, further market capitulation could be on the cards. In such a scenario, Bitcoin could potentially drop towards the next major support range between $40,000 and $50,000.
The question remains: will Bitcoin hold or break? Stay tuned for more updates on the situation.