Bitcoin plunge to continue on German, US government liquidations

A representation of the virtual cryptocurrency Bitcoin / Korea Times photo by Shim Hyun-chul

Bitcoin prices are expected to remain in a downtrend for the time being, stymied by a selloff from the German government and Mt. Gox, a now-defunct crypto exchange in the process of redeeming investors, market watchers said Wednesday.

Experts say the leading virtual coin will plunge for months before breaking out to the upside, as inferred from previous price movements.

Bitcoin plunged 8 percent to $56,700 (78.5 million won) Friday from two weeks earlier, after Mt. Gox, as well as the governments of Germany and the United States, continued a selling spree.

Mt. Gox went bankrupt in February 2014 after an incident in which $460 million of bitcoins were stolen. It is liquidating the digital coins to redeem its creditors and customers $9 billion owed.

The German government sold up to $175 million in seized bitcoins.

Both the U.S. and German governments sent a combined $738 million to bitcoin exchanges for liquidation between June 21 and Friday.

The German government’s move fueled concerns over accelerated market tumbling, potentially joined by Mt. Gox with 140,000 bitcoins.

The German government is estimated to have sold more than half its 40,000 bitcoins from Friday to Tuesday.

As of Wednesday, the virtual coin has dropped in value by 25 percent from the mid-March peak of $73,135.

The announcements of a dovish pivot by the U.S. Federal Reserve, combined with U.S. macroeconomic indicators, will determine the course of the virtual asset.

Benjamin Cowen, a widely followed crypto analyst, said that bitcoins will have no upward growth momentum for at least a few more months.

Cowen said that based on history, the crypto is expected to track down until September or October before snapping the trend.

In the 2019 chart, it took bitcoin 202 days to break out of a similar downtrend, he said, a highly likely scenario for the current path of the digital coins.

“If you actually look at the time range, excluding the pandemic crash, it took about 202 days,” he said on his YouTube channel.

Cowen added that since the crypto market leader has been in a downtrend for 114 days already, about 90 days will be needed to show a dramatic uptick. This means no earlier than October.

“If you look at where Bitcoin is right now and how long it has been in this channel so far, it’s been about 114 days or 115 days. 202 days would actually 커뮤니티 put you all the way out in October,” he said.

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