Bitcoin (BTC-USD) slid to a two-month low on Thursday, extending a month-long decline as uncertainty over U.S. presidential elections and reports of bitcoin supply from the defunct Tokyo-based crypto exchange, Mt. Gox, weighed on the market.
Bitcoin fell more than 2% to $57,843, its lowest since May 2, and has lost more than 6% so far this week. The world’s largest cryptocurrency has been under pressure in recent months, with its slide accelerating this week following the first debate between U.S. presidential candidates Joe Biden and Donald Trump, which raised the possibility of Biden being replaced as a candidate.
“If he [Biden] is to be replaced, and there’s a lot of conversation going on around that, that person may not be pro-crypto,” said Josh Gilbert, a market analyst at digital brokerage eToro.
Bitcoin had a strong start to the year after the launch of exchange-traded funds (ETFs) in the U.S., propelling it to a record $73,803.25 in mid-March as investors poured in. However, the rally has fizzled, with bitcoin losing more than 21% since then.
A politically charged backdrop, with ongoing elections in France and Britain, is resulting in some risk reduction, analysts said, alongside the changing odds in the U.S. election campaign.
Mt. Gox Influence on Bitcoin Prices
Analysts also pointed to reports that Mt. Gox, the world’s leading exchange for cryptocurrencies before it went defunct in 2014, is repaying its creditors, which could be dragging bitcoin lower if those creditors offload their tokens.
“There is an anticipation that some of those original buyers of bitcoin will start to sell on the market, which is a fairly big chunk,” said Tony Sycamore, a market analyst at IG. Sycamore added that while this is a period of consolidation for the cryptocurrency after strong gains earlier this year, it could retest the March highs and probably push up towards $80,000.
Ether (ETH-USD), another major cryptocurrency, was trading more than 1% lower at $3,213.0, and is down more than 22% from its mid-March highs.
Political Uncertainty and Market Volatility
The uncertainty surrounding the U.S. presidential elections is a significant factor affecting the cryptocurrency market. The debate between Biden and Trump has added to the volatility, with investors concerned about potential policy changes that could impact the crypto sector. The possibility of a less crypto-friendly candidate replacing Biden has intensified these fears.
Market Outlook
Despite the recent downturn, some analysts remain optimistic about Bitcoin’s long-term prospects. The market is currently in a consolidation phase, which could be a precursor to another upward move. The anticipation of potential token sales from Mt. Gox creditors is a factor that needs to be monitored closely, as it could create additional selling pressure in the short term.
However, the underlying fundamentals of Bitcoin and other cryptocurrencies remain strong, with continued interest from institutional investors and ongoing developments in blockchain technology.
Conclusion
Bitcoin’s recent drop to a two-month low reflects the current uncertainty in the market, driven by political factors and potential large-scale token sales. While the short-term outlook is cautious, the long-term prospects for Bitcoin and the broader cryptocurrency market remain positive, with potential for significant gains once the current uncertainties are resolved.
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