Markets
Bitcoin Falls 12% Over Past Week as Mt. Gox Refunds Flood Market
Over the past week, the Bitcoin price Bitcoin’s price fell nearly 12% to around $55,700 as of noon ET Monday. The latest drop in the original cryptocurrency, experts told Fortune, is largely due to a surge in on-chain selling.
According to Matteo Greco, research analyst at Fineqia International, one of the catalysts for the recent price drop is due to the refunds made by Mt. Gox. went bankrupt ten years ago following a hackbut it has started returning about $8 billion in Bitcoin to its creditors.
According to Greco, so far, 47,228 bitcoins have been verified to have been moved from a wallet associated with Mt. Gox to a new address likely intended for refunds. While investors could be forced to wait up to three months to access the funds, news of the refunds has spooked the market and prompted current holders to start selling, Greco says.
Selling pressures “over”
This pressure is reinforced by the Bitcoins recently transferred to exchanges by the German and American governments. In about two weeks, wallet addresses linked to these countries have sent $737.6 million in Bitcoins to CoinbaseBitstamp, Kraken and Flow Traders, according to Concrete block workThe Bitcoin in question is believed to have been seized by authorities in connection with various criminal cases.
But taking a step back, the cryptocurrency has failed to gain momentum since mid-March, when it hit record highs of just over $73,000. The MVRV (market value to realized value) ratio currently stands at around 1.5, indicating an average unrealized profit of 50% among market participants, according to Greco. “This is a sharp decline from the three-plus value seen in March,” he adds.
In addition, selling pressure remains high after April. Bitcoin Halving, Which has reduced the rewards miners receive for minting new coins by 50%. Although this pressure has shown signs of easing in recent days, it still exceeds demand, exacerbating the short-term price decline, Greco explains.
If the current pullback lasts through the end of this week, Bitcoin will have been in decline for five straight weeks, the longest stretch since the 2022 bear market. Traders “don’t want to be left with billions of dollars of supply that could come into the market in the coming weeks,” Andrew Baehr, head of product at CoinDesk Indices, told Fortune.
And even if these market pressures build in the short term, they remain “limited” and investors, historically, can expect some form of resolution, adds Baehr, who likened the situation to the market “cleaning dirty dishes. Potential waves of new adoption can become larger and can provide a source of support to drive prices higher.”
What about the “Trump Trade”?
As the market searches for a way out of a nearly four-month impasse, some are considering the possibility of a “Trump Trade” to boost the market – a term referring to a rally toward the end of the year if the former president wins the November election. After last week’s disastrous presidential debate between President Joe Biden and U.S. President Donald Trump, some see the odds of a crypto-friendly president increasing.
In recent months, Trump has sought to exploit every dollar and every vote of the crypto industry he can, including courting the executives of publicly traded Bitcoin miners CleanSpark and Riot Platforms to an event at Mar-a-Lago. Weeks before that meeting, Trump reportedly turned to Elon Musk for advice on crafting his crypto policy, Bloomberg reported. His presidential campaign also started to accept donations via any crypto asset accepted via Coinbase.