Markets
Bitcoin price drops to four-month low as Mt. Gox makes first repayments
Mt. Gox distributed $148.4 million to creditors via the Bitbank exchange.
Cryptocurrency markets continue to plummet as investors fear an influx of heavy selling pressure from Mt. Gox creditors and the German government.
The combined market capitalization fell below $2.2 trillion for the first time since February, marking a 21% decline since hitting a local high of $2.785 four weeks ago.
The price of Bitcoin Bitcoin briefly dipped below $54,000 after falling 8% in less than 12 hours, before staging a modest rebound to climb back above $55,000, according to CoinGecko. Bitcoin is now down 23% in 30 days.
BTC price. Source: CoinGecko.
Ethereum hit a low of $2,831 after falling 10.6% in 11 hours, and last changed hands at $2,941. ETH price is also down 24% in about four weeks, despite expectations that Spot Ether exchange-traded funds could begin trading in the coming weeks.
Despite the bearish performance of BTC and ETH, both assets continue to regain the upper hand as altcoins suffer brutal losses. Bitcoin now accounts for 52.85% of the combined cryptocurrency market cap, while Ethereum is at 17.7%, up from 44.3% and 14.5% respectively since mid-February.
Notable losses from the top 100 altcoins include Arbitrum (ARB) with the third heaviest loss in the last 24 hours at 14.4%, Optimism (OP) with a decline of 13.9%, Notcoin (NOT) with 13.5%, Polkadot (POINT) Down 4.2% and Solana (GROUND) with a modest 2.5% retracement.
Only two of the top 100 cryptocurrencies bucked the trend and posted a gain over the past 24 hours, with MultiversX (EGLD) up 6.2% and Fasttoken (FTN) up 1.9%.
According to CoinGlass, leveraged traders have suffered liquidations worth $570.5 million in the past 24 hours, including $183 million in BTC positions and $137 million in ETH trades.
Mt. Gox Transfers Trigger Wave of Selling
The bearish momentum coincided with Mt. Gox, the former pioneering cryptocurrency exchange, making its first repayments to creditors more than 10 years after halting withdrawals and filing for bankruptcy.
According to Arkham Intelligence, one of Mt. Gox’s wallets made a large transfer of Bitcoin worth $2.71 billion about 12 hours ago — precipitating the sharp decline in crypto markets, Mt. Gox follow up with a transfer of $148.4 million three hours later, before sending $84.9 million worth of BTC to cryptocurrency exchange Bitbank.
On Reddit, user “mikeplus20”published They said they were reimbursed by Mt. Gox via Bitbank. “BTC/BCC coins are already under my control!” “I received exactly the amount shown in the Mt. Gox chart. I use Bitbank as my exchange.”
On July 5, a notice A press release was posted on Mt Gox’s website saying that some of its creditors had been repaid. It added that further repayments would be made once various conditions were met, asking creditors to “bear with it” — suggesting that it could be some time before further distributions are made.
Oddly enough, the link to the ad now shows a 404 error, meaning the ad has been taken offline.
Are Mt. Gox Fears Overblown?
The drama follows a June 24 announcement from the Mt. Gox rehabilitation trustee revealing that the exchange was preparing to begin distributing payments this month.
Although the exchange holds 141,687 Bitcoin and Bitcoin Cash worth about $8 billion, a July 4 report from CoinShares estimated that only 75,000 BTC and BCH will be paid out in the short term – with the first round of payments reserved for creditors who agreed to receive payment before the resolution of civil litigation proceedings in exchange for forfeiting 10% of the funds owed to them.
Yet, with $3.9 billion worth of BTC potentially about to hit the markets, analysts have assigned The recent wave of declines has raised concerns among investors looking to reduce their exposure ahead of repayments. CoinShares estimates that the value of creditors’ holdings has increased by 13,600% since Mt. Gox was shut down in February 2014.
However, not everyone is convinced that Mt. Gox’s distributions are cause for concern.
“For many, this will be a huge tax event if they decide to sell immediately,” said Luke Nolan, associate researcher at CoinShares. “It’s very likely that a large number of creditors will either choose to sell only a small portion of their holdings or hold on to them for the time being.”
“Many early adopters of Mt. Gox, as well as lenders, are long-time Bitcoin enthusiasts who are less likely to sell all of their Bitcoin right away,” OKX Chief Commercial Officer Lennix Lai told The Defiant.
German Authorities Appear to Have Sold $483.8 Million of BTC in 16 Days
Large Bitcoin transfers from wallets linked to German authorities have also spooked investors.
On January 30, German police announcement They had seized 50,000 BTC ($2.1 billion at the time) in Bitcoin from an individual who worked for Movie2k, a popular website that distributed pirated movies between 2008 and 2013. The individual had been in custody since his arrest on suspicion of money laundering in 2019, and recently agreed to transfer his BTC holdings to German authorities while cooperating with police.
A wallet reported The German government-owned Arkham wallet began making large transfers to cryptocurrency exchanges on June 19, sparking fear in the markets. So far, the wallet has dump 8,774 BTC ($483.8 million at current prices), including 4,774 BTC since the beginning of July.
About four hours ago, the wallet transferred 547,439 BTC worth $30 million to Flow Traders, a market-making company.
“Taking previous law enforcement sales, such as the Silk Road case, as a benchmark, they did not result in a sustained catastrophic drop in prices, indicating that the market tends to hold enough liquidity to absorb the selling,” Lai said.