Markets
Bitcoin poised for worst week in nearly a year on Mt. Gox sell-off fears
NEW YORK/SINGAPORE/LONDON, July 5 (Reuters) – Bitcoin was poised for its biggest weekly drop in nearly a year on Friday as traders worried about a likely sell-off of tokens from now-defunct Japanese exchange Mt. Gox and more selling by leveraged investors after the cryptocurrency’s strong performance.
The price of the world’s largest cryptocurrency fell as much as 8% on the day to $53,523, its lowest since late February. It was last trading at $56,565, down more than 3% on the day.
It was on track for a weekly decline of more than 10%, the biggest since August 2023.
Ether, the world’s second-largest cryptocurrency, fell to $2,822.30, a more than two-month low. It was last at $2,976.62, down 5.28%.
Media reports said Mt. Gox, the world’s leading cryptocurrency exchange before it collapsed a decade ago, may start returning bitcoins to creditors, who are seen as likely sellers as the token was worth just hundreds of dollars in 2014.
“Selling pressure is still related to the sell-off by creditors of the failed Mt Gox exchange,” said Tony Sycamore, market analyst at IG.
“However, the downward acceleration suggests the market is trying to get ahead of creditor flows.”
Bitcoin’s downward move has triggered the biggest daily liquidations for cryptocurrency traders since the collapse of cryptocurrency exchange FTX in 2022, according to a research note from Wintermute, a cryptocurrency trading firm.
Analysts also raised concerns about the possibility of Joe Biden being replaced as Democratic presidential candidate by someone less pro-crypto after a shaky debate performance with rival candidate Donald Trump.
“What’s striking about this drop in bitcoin is that it comes at a time when U.S. stocks and global equity indices are at or near record highs. The correlation between bitcoin and traditional stocks is eroding,” said Antoni Trenchev, co-founder of cryptocurrency exchange Nexo.
Bitcoin had a strong beginning of the year after the launch of exchange-traded funds in the US, propelling it to a record high of $73,803.25 in mid-March. However, it has struggled since then.
“With an asset that has been range-bound for some time and has recently been at the lower end of that range, there are a lot of margin positions,” said Justin D’Anethan of digital asset market maker Keyrock.
“This, of course, creates a cascading effect, pushing prices down even further than in a less leveraged market.”
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Reporting by Hannah Lang in New York and Ankur Banerjee, Tom Westbrook and Sameer Manekar in Singapore and Iain Withers in London; Editing by Edwina Gibbs, Kim Coghill and Anil D’Silva
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