Markets
Mt. Gox Bitcoin Payment Fears Wipe $170 Billion From Crypto Market
The cryptocurrency market saw a substantial decline on Friday, adding to the selling pressure seen over the past two weeks. The leading cryptocurrency, Bitcoin (BTC), has declined more than 20% from its June and May highs, falling as low as $53,500.
The market decline was largely attributed to the long-awaited trustee overseeing the Mt. Gox bankruptcy announcing the launch of Bitcoin and Bitcoin Cash. repayments to creditors hit by the infamous computer hack that resulted in billions in losses.
As a result, the entire cryptocurrency market lost over $170 billion in combined market capitalization in just 24 hours.
Bitcoin Refunds and German Government Liquidation
Mt. Gox bankruptcy trustee Nobuaki Kobayashi declared that refunds in Bitcoin and Bitcoin Cash had begun through designated crypto exchanges.
Although the amount transferred to these exchanges was not specified, data Business intelligence platform Arkham revealed that 47,229 BTC, valued at $2.71 billion, had been transferred to an unknown address.
Kobayashi stressed that the remaining funds would be returned to creditors once “specific conditions” were met, including the verification of registered accounts and the finalization of discussions with designated creditors. Exchanges.
The drop in cryptocurrency prices has led to substantial liquidations in derivatives markets, with over 229,755 traders experiencing combined liquidations worth $639.58 million in the past 24 hours. Of this, $540.46 million represented long trades, indicating positions taken by investors expecting the asset to appreciate in the long term.
Additionally, the German government contributed to the market pressure by selling around 3,000 BTC, equivalent to around $175 million, to a cache seized 50,000 BTC linked to Movie2k movie piracy operation. Despite the sale, the government still holds over 40,000 BTC, valued at over $2 billion.
What historical price cycles suggest
Despite the continued bloodbath seen in cryptocurrency prices over the past month, industry insiders and analysts remain optimistic about Bitcoin’s future performance.
Despite short-term selling pressure from Mt. Gox repayments, experts anticipate a rebound toward the end of the year. Cryptocurrency research and data company CCData suggested that the current Bitcoin appreciation cycle has not yet peaked and will likely reach a new all-time high.
Historical market cycles indicate that the Bitcoin halving event, which reduces the supply of new BTC, typically precedes a period of price expansion between 12 and 18 months. The last halving took place in April, suggesting further potential growth through 2025.
Tom Lee, co-founder and director of research at Fundstrat Global Advisors, told CNBC that he expects Bitcoin to hit $150,000 despite the Mt. Gox advance.
The launch of an Ethereum exchange traded fund (ETF) in the United States and the approval of the first US spot Bitcoin ETF earlier this year contribute to the overall positive market sentiment, indicating potential growth and more widespread adoption of cryptocurrencies.
At the time of writing, BTC is trading at $55,680, reflecting a significant 21% drop in price over the past month. Market bulls are closely monitoring the $54,480 price level, which represents substantial support for BTC. This level is of crucial importance as it could prevent further price declines and the risk of breaking the crucial $50,000 level.
Featured image of DALL-E, chart from TradingView.com