Bitcoin
Mt. Gox Bitcoin Payments Fears Wipe $170 Billion Off Crypto Market
The cryptocurrency market suffered a substantial drop on Friday, compounding the selling pressure witnessed over the past two weeks. Leading cryptocurrency Bitcoin (BTC) retreated more than 20% from its highs in June and May, falling to $53,500.
The market decline was largely attributed to the long-awaited administrator overseeing the bankruptcy of Mt. Gox, which heralded the launch of Bitcoin and Bitcoin Cash. refunds to creditors affected by the infamous 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 Settlement
The trustee in charge of the Mt. Gox bankruptcy estate, Nobuaki Kobayashi, stated that Bitcoin and Bitcoin Cash payments began through designated cryptocurrency exchanges.
Although the amount transferred to these scholarships was not specified, data from market intelligence platform Arkham revealed that 47,229 BTC, valued at $2.71 billion, was transferred to an unknown address.
Kobayashi stressed that the remaining funds would be returned to creditors once “specific conditions” were met, including verification of registered accounts and completion of discussions with the designated exchanges.
The decline in crypto 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 amount, $540.46 million represented long trades, indicating positions taken by investors expecting long-term asset appreciation.
Additionally, the German government contributed to the market pressure by selling approximately 3,000 BTC, equivalent to about $175 million, from a seized stock of 50,000 BTC associated with the Movie2k movie piracy operation. Despite the liquidation, the government still holds over 40,000 BTC, valued at over $2 billion.
What Historical Price Cycles Suggest
Despite the bloodbath witnessed in cryptocurrency prices over the past month, analysts and industry experts remain optimistic about Bitcoin’s future performance.
Despite short-term selling pressure resulting from Mt. Gox refunds, experts anticipate a recovery by the end of the year. Cryptocurrency data and research firm 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 a Bitcoin halving event, which reduces the supply of new BTC, typically precedes a period of price expansion lasting between 12 and 18 months. The most recent halving occurred in April, suggesting potential for further growth through 2025.
Tom Lee, co-founder and head of research at Fundstrat Global Advisors, told CNBC that he predicts Bitcoin will hit $150,000 despite Mt. Gox’s glut.
The launch of an Ethereum commercial fund exchange (ETF) in the US and the approval of the first spot Bitcoin ETF in the US earlier this year contribute to the overall positive sentiment in the market, indicating potential growth and further mainstream 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. The bulls in the market are closely monitoring the $54,480 price level, representing substantial support for BTC. This level holds critical importance as it can prevent further price declines and the risk of breaking below the crucial $50,000 level.
Featured image of DALL-E, chart from TradingView.com