Markets
Bloodbath in Cryptocurrency Market as Mt. Gox Bitcoin (BTC) Payment Approaches
Cryptocurrencies fell Friday as investors focused on the nearly $9 billion payout to users Bitcoin exchange Mt. Gox has collapsed.
Bitcoin price has dropped nearly 3% to $56,571.00, according to Coin Metrics. Earlier in the day, the world’s largest cryptocurrency had fallen to $53,513.55, marking its first drop below the $55,000 level since February 27.
Rival token ether, meanwhile, fell about 5% to $2,971.68.
At one point, the entire cryptocurrency market had lost more than $170 billion in combined market capitalization over a 24-hour period, according to data from CoinGecko.
Mt. Gox bankruptcy trustee Nobuaki Kobayashi said in a statement Friday: statement that it had begun making repayments in bitcoin and bitcoin cash to certain creditors through a number of designated crypto exchanges.
The Mt. Gox trustee did not say how much money was transferred to those exchanges.
He noted that the remaining funds would be returned to creditors once a series of conditions were met, including confirmation of the validity of the registered accounts and the completion of discussions between the trustee and the designated crypto exchanges.
The trustee is still working to ensure that repayments “can be made safely,” Kobayashi wrote, urging “creditors eligible for rehabilitation to wait a bit.”
This comes after a small amount of bitcoin was moved out of wallets associated with Mt. Gox, according to blockchain analytics firm Arkham Intelligence, with the largest movement being a $24 transfer to Japanese crypto exchange Bitbank.
Bitbank is among the beneficiaries listed to support the refunds.
Recently, the world’s largest cryptocurrency has been under pressure by news of the collapse of bitcoin exchange Mt. Gox, which is preparing the distribution worth approximately $9 billion of parts to users.
This dumping of coins on the market is should lead to significant sales action.
The fall in cryptocurrency prices has led to heavy liquidations in derivatives markets, according to crypto data firm Coinglass, which suggests that 229,755 traders saw their positions worth a combined $639.58 million liquidated in the past 24 hours. Of that, $540.46 million represented long trades, which are financial positions taken when an investor expects the price of an asset to appreciate in the long term.
Also putting pressure on cryptocurrency markets, the German government on Thursday sold about 3,000 bitcoins — worth about $175 million at today’s prices — from a stash of 50,000 bitcoins seized as part of the Movie2k movie piracy operation, according to Arkham Intelligence.
Arkham, which monitors Germany’s Bitcoin wallet, noted that the government still holds more than 40,000 bitcoins worth more than $2 billion.
Industry insiders still expect bitcoin prices to rise again towards the end of the year, once the short-term selling pressure expected from Mt. Gox repayments subsides.
Analysts at crypto research and data firm CCData said in a report Tuesday that bitcoin has yet to reach the peak of its current appreciation cycle and is expected to reach a new historic record.
Historical market “cycles” have shown that the so-called bitcoin halving event – which reduces the supply of new bitcoins on the market – has always preceded a period of price expansion that can last between 12 and 18 months “before producing a cycle top,” CCData said in its report.
The last Bitcoin halving took place on April 19 of this year, so those historic deadlines are not over yet.
“Additionally, we observed a decline in trading activity on centralized exchanges for nearly two months following the halving event in previous cycles, which appears to have mirrored this cycle. This suggests that the current cycle may extend further into 2025,” CCData said.
Tom Lee, co-founder and director of research at Fundstrat Global Advisors, told CNBC: “Scream box” Monday that he Bitcoin Could Still Hit $150,000 Despite ‘Overhang’ From Upcoming Mt. Gox Payout of tokens to creditors.
“If I had invested in crypto, knowing that one of the biggest surpluses was going to disappear in July, I would think that’s a reason to expect a pretty sharp rebound in the second half of the year,” Lee said.
Investors are still waiting for the Ether Exchange Traded Fund Launched in the United States, which would follow the approval of the first U.S. bitcoin spot ETF in January.
In May, the U.S. Securities and Exchange Commission approved a rule change that would pave the way for ETFs that buy and hold ether.
VanEck, BlackRock, Bitwise and Galaxy Digital are among the companies looking to launch their own ether ETFs.