Decoding the Major Drop Bitcoin Plummets to 54000

Over the past 7 days, the price of Bitcoin has fallen by more than 11%, hovering around $54,250 at the time of writing, with a 24% drop in just the past 5.5 hours.
Here are the main factors behind the decline:
German Government Selling
The decision of the German government to begin liquidating their Bitcoin holdings affected market sentiment, with transactions observed towards some of the largest exchanges, such as Kraken, Bitstamp, and Coinbase.
Over the past two weeks, the government has reduced their holdings from 50,000 BTC to 41,774 BTC as of July 5.
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German Politicians Call on Government to Stop Selling Bitcoin
Miner Capitulation
Following Bitcoin’s last halving event, which took place in April 2024, the mining reward was reduced from 6.25 to 3.125 BTC, increasing economic pressure on miners. This reduction was expected to significantly raise Bitcoin’s price, but this did not happen, leaving miners with diminishing returns.
According to analysts from CryptoQuant, the current miner capitulation is similar to previous market bottoms, like the one following the FTX crash. Indicators of miners’ distress include a 7.7% drop in hashrate and a drop in mining revenues to near historic lows, forcing many to shut down their equipment and sell their BTC holdings.
Repayment of Mt. Gox Hack Funds
Plans for the distribution of 142,000 BTC from the now-defunct Mt. Gox exchange have created significant market anxiety. This amount, representing almost 0.7% of Bitcoin’s total supply, will be distributed among the creditors of the exchange, which was closed in 2014 after a major hack.
After reports earlier today that the recovery trustee had moved $2.7 billion in preparation for the payouts that started shortly thereafter, the price of Bitcoin fell to around $54,000.
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What Will Investors Do with Mt. Gox Funds?
Slowdown in US Spot Bitcoin ETF Activity
Contrary to expectations of a market boost from institutional investments through spot Bitcoin ETFs, this sector has seen a noticeable slowdown. The anticipated “second wave” of institutional money has not materialized so far, leading to reduced activity in the exchange-traded fund space.
Enthusiasm regarding Bitcoin ETFs has failed to counteract predominantly negative market sentiment. Nevertheless, their direct impact remains relatively weak. James Check, an analyst known as “Will Die,” recently calculated that only 20% of the spot volume is attributed to these ETFs, with the remainder coming from traditional spot markets.