Strategy Overlaid With Mt. Gox Storm, Can Bitcoin Hold the $60,000 Line?

TradingKey - Strategy's selling action hammered Bitcoin; as the Mt. Gox repayment deadline nears, selling pressure intensifies, with a potential drop toward $60,000 not ruled out.

On June 3, Bitcoin ( BTC) saw its decline widen further to 5%, hitting a low of $65,603 and touching levels last seen on March 29 this year. Meanwhile, other mainstream coins generally followed suit, with Solana ( SOL) falling nearly 7%, Ethereum ( ETH) and BNB ( BNB) both dropping about 6%, XRP ( XRP) and TRON ( TRX) declining by approximately 3%.

Currently, the market is completely shrouded in panic, with the sentiment index plunging to 26, nearing extreme fear. However, several indicators suggest that panic selling has been exhausted, laying the groundwork for a subsequent rebound to halt the decline. Technical indicators show the RSI dropped to a low of 21 today, breaking through the critical threshold (30), which indicates the market has entered oversold territory and is poised for a bounce. Furthermore, the daily candlestick chart shows a downward wick, suggesting that capital is providing support at these levels. Bitcoin Price Chart, Source: TradingView

Over the past 24 hours, nearly 280,000 traders were liquidated in the crypto market, with the total amount reaching $1.85 billion. Long liquidations accounted for $1.65 billion, or 89% of the total. Typically, after massive liquidations in one direction, a reverse move often follows to liquidate positions in the opposite direction—a common "washout" tactic in the crypto market. Therefore, a retaliatory rebound could occur next, forcing shorts to cover and give back profits.

Crypto Market Liquidation Data, Source: CoinGlass

However, the aforementioned scenario is a common phenomenon in the absence of external interference. This week, the U.S. will release several economic data points, including ADP and non-farm payrolls, which will determine whether the Federal Reserve cuts interest rates. If these data points help bolster expectations for a rate cut this year, Bitcoin's panic selling will be halted. Conversely, they could fuel bearish sentiment and prompt some bulls to switch sides and join the sell-off, potentially causing Bitcoin to lose its strong support at $60,000.

While Strategy broke the long-standing myth of "only buying and never selling" by selling Bitcoin for the first time, sparking widespread market panic, no further selling activity has occurred so far. However, another force that cannot be ignored may deal an even more lethal blow to the market.

The defunct exchange Mt. Gox holds 35,000 Bitcoins, with a repayment deadline set for October 31 this year. However, Arkham monitored the exchange transferring approximately 10,000 Bitcoins from its cold wallet today. Such on-chain movements are typically associated with distribution. This potential selling pressure could not only dampen the appetite of Wall Street spot ETFs to absorb the supply but also cause current holders to spiral into panic again.

It is worth emphasizing that Mt. Gox creditors may not necessarily sell their Bitcoin immediately upon receiving it. If market conditions support a price increase, they typically choose to continue holding; if conditions are unfavorable, they may sell for cash. Looking at this year's environment, whether conditions are favorable depends primarily on whether the Federal Reserve cuts rates and the outcome of the U.S. midterm elections.