Around 5 p.m. today, Bitcoin briefly dipped to $56,952, testing the low point seen on May 1st. Analysts believe that if the next support level at $56,500 is breached, it could potentially drop to $50,000 to $52,000.
The downward trend of Bitcoin is attributed to the start of repayments by Mt. Gox triggering selling pressure, resulting in liquidations worth $220 million from 90,000 individuals.
Continuing its decline, Bitcoin rebounded around 10 a.m. today, but began oscillating narrowly around $59,000, before starting another drop around 3 p.m. and briefly hitting $56,952 a little after 5 p.m.
Market analysts predict that as many bullish investors set their stop-loss orders near the previous low of $56,552 (set on May 1st), there is a possibility of testing that level. If a quick recovery is not seen after breaching it, there could be further downside pressure.
The renewed drop in Bitcoin is widely attributed to the German government. Data from the Arkham platform reveals that a wallet linked to the German government transferred a total of 1,300 Bitcoin (approximately $74.75 million) to three exchanges – Coinbase, Kraken, and Bitstamp around 4 p.m.
While the German government’s transfer of Bitcoin to exchanges may not necessarily indicate selling intentions, it has the potential to spark investor panic and trigger a selling spree.
On the other hand, some investors may wonder at what price Bitcoin might stabilize after such significant downward movements. Crypto technical analyst Dom’s Crypto has noted that the crucial support level of the 200-day moving average (MA) at $58,484 has been breached, with the next support level anticipated at $56,700.
Additionally, crypto technical analyst Tuna KAYA suggests that the support level for Bitcoin stands at $56,500. If this level is not held, Bitcoin may decline further to $50,000 to $52,000.