An oversupply from Mt. Gox and government agencies soured market sentiment. Tron’s founder offered to buy the German government’s BTC holdings to reduce the negative impact on the market.
The cryptocurrency market slump worsened on July 4, amid Mt. Gox’s preparations and test transactions to begin distributing approximately $8 billion worth of bitcoin [BTC].
Despite Mt. Gox’s impending oversupply, the German government continued to sell its BTC holdings. On July 4, it moved 3K BTC, but dumped 1.3K BTC, worth more than $78 million, on Bitstamp, Coinbase and Kraken, further destabilizing the market.
In the midst of the ensuing market carnage, Tron [TRON] founder Justin Sun offered to buy all of the federal government’s BTCs off the market to mitigate the impact.
“I am willing to negotiate with the German government to buy all of the BTC out of the market to keep the impact on the market to a minimum,” Sun pointed out.
German Bitcoin Holdings and Market Reactions
According to Arkham Intelligence, the German government still had 40,300 BTC, worth $2.3 billion, to dispose of. However, it was unclear whether Sun’s offer was legitimate or just a typical joke.
Perhaps Sun’s offer, even if fulfilled, could not effectively stem the current market decline. In addition to the German government, three other BTC whales also dumped on July 4, dragging BTC down to $57K.
PerfecChain data showed that the U.S. government also moved $13.67 million of BTC and still held $12.3 billion. In addition, two unmarked whale wallets dumped more than 4,500 BTC worth nearly $270 million, adding to the selling pressure.
Meanwhile, cryptocurrency market commentator Samson Mow criticized the German and U.S. governments’ decision to sell BTC directly to exchanges:
“Imagine selling the hardest form of money ever… Finally, imagine selling on exchanges with market orders, reducing the price to get even less”.
Falling to the $57K level caused more than 65% of BTC addresses to lose money, especially those who bought between $48.6K and $65.9K.
In addition, the extended rollover liquidated $113 million of positions in BTC, and the long positions took the brunt of nearly $100 million in right positions in the last 24 hours.
Bitcoin Bleed-off: Sinks to $54,000 and Breaks All Supports
César Nuez, technical analyst at Bolsamania, warns to be careful with the Queen cryptocurrency after it lost the short-term support it presented at $56,910.
“After three and a half months of sideways movement, the crypto is losing momentum and is dangerously close to the $50,000 support. At these prices is the 200-session average. This average acts as a medium-term support, so it would seriously complicate its technical aspect if it manages to leave us,” he notes. If it fails to hold at this level, he does not rule out an extension of the fall to $40,000.
One likely cause of this debacle has to do with the actions of the defunct cryptocurrency exchange Mt. Gox, which, after several days of waiting, has begun returning some of the bitcoin stolen in a 2014 cyberattack.
According to data from blockchain analytics firm Arkham Intelligence, Mt. Gox moved about 47,228 BTC, worth $2.6 billion at current market prices, into a cold wallet at 2:27 a.m. Friday.
Through this process, the company will return approximately 140,000 BTCs ($7.7 billion) and another 143,000 Bitcoin Cash tokens (BCH; 41.6 million) in cryptocurrency alone.
Although these tokens are only a fraction of the estimated 740,000 bitcoins stolen in the cyberattack, the market fears that many of the investors who recover their BTC will decide to sell them immediately, creating a glut and further driving down prices.
By Audy Castaneda
