Markets
Bitcoin price drops to four-month low as Mt. Gox makes first payments
Mt. Gox distributed $148.4 million to creditors via Bitbank exchange.
Cryptocurrency markets continue to fall as investors fear heavy selling pressure from Mt. Gox creditors and the German government.
The combined market cap 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.
Bitcoin Price briefly dipped below $54,000 after falling 8% in less than 12 hours before posting a modest bounce to climb back above $55,000, according to CoinGecko. BTC 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 was last trading at $2,941. ETH price has also fallen 24% in about four weeks, despite expectations that spot Ether exchange-traded funds could begin trading in the coming weeks.
However, despite the bearish performances of BTC and ETH, both assets continue to regain dominance as altcoins suffer brutal losses. Bitcoin now accounts for 52.85% of the combined cryptocurrency market cap, while Ethereum stands at 17.7% — up from 44.3% and 14.5% since mid-February, respectively.
Notable losses from the top 100 altcoins include Arbitrum (ARB) with the third largest loss in the last 24 hours, of 14.4%, Optimism (OP) with a 13.9% retracement, Notcoin (NO) with 13.5%, Polkadot (POINT) down 4.2%, and Solana (SUN) with a modest decline of 2.5%.
Only two of the top 100 cryptocurrencies bucked the trend and posted gains in the last 24 hours, with MultiversX (EGLD) rose 6.2% and Fasttoken (FTN) rose 1.9%.
According to CoinGlass, leveraged traders suffered $570.5 million in liquidations over the past 24 hours, including $183 million in BTC positions and $137 million in ETH trades.
Mt. Gox transfers trigger liquidation
The downturn coincided with Mt. Gox, the now-defunct pioneering cryptocurrency exchange, making its first payments to creditors more than 10 years after halting withdrawals and filing for bankruptcy.
According to Arkham Intelligence, one of the Mt. Gox wallets made a large Bitcoin transfer worth US$2.71 billion about 12 hours ago — precipitating the sharp drop in cryptocurrency markets, Mt. Gox followed with a $148.4 million transfer three hours later, before sending $84.9 million worth of BTC to cryptocurrency exchange Bitbank.
On Reddit, user “mikeplus20”posted that they were reimbursed by Mt. Gox via Bitbank. “The BTC/BCC coins are already in my control!” they said. “I received exactly the amount shown in the Mt. Gox table. I am using Bitbank as my exchange.”
On July 5th, a to perceive was posted on Mt Gox’s website stating that some of its creditors had been repaid. It added that further repayments would be made once several conditions were met, asking creditors to “wait a bit” — suggesting it could be some time before more distributions are made.
Interestingly, the link to the notice now displays a 404 error, meaning the ad has been taken down.
Are Mt. Gox fears overblown?
The drama takes place on June 24th announcement from Mt. Gox’s rehabilitation administrator revealing that the exchange was preparing to begin distributing payments this month.
While the exchange holds 141,687 Bitcoin and Bitcoin Cash worth approximately $8 billion, a July 4 report from CoinShares estimated that only 75,000 BTC and BCH will be paid out in the near term — with the initial round of payments going to creditors who agreed to receive payment prior to the resolution of civil litigation proceedings in exchange for forfeiting 10% of the funds owed to them.
Still, with $3.9 billion worth of BTC potentially about to hit the markets, analysts have assigned the recent wave of bearish momentum for nervous investors looking to reduce their exposure ahead of repayments. CoinShares estimated that the value of creditors’ holdings has risen 13,600% since Mt. Gox shut down in February 2014.
However, not everyone is convinced that Mt. Gox’s distributions are a cause for concern.
“For many, this will be a steep tax event if they decide to sell immediately,” said Luke Nolan, a research associate at CoinShares. “It is very likely that a large number of lenders will choose to sell only a small portion of their holdings or hold on to them for now.”
“Many of Mt. Gox’s early adopters, as well as lenders, are long-time Bitcoin enthusiasts who are less likely to sell all their Bitcoins immediately,” Lennix Lai, OKEx’s chief commercial officer, told The Defiant.
German authorities appear to have unloaded $483.8 million worth of BTC in 16 days
Sizeable Bitcoin transfers from wallets linked to German authorities have also spooked investors.
On January 30, German police announced they 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 being arrested on suspicion of money laundering in 2019 and recently agreed to transfer his BTC assets to German authorities while cooperating with police.
One wallet flagged by Arkham as belonging to the German government began making large transfers to cryptocurrency exchanges on June 19, sparking fear in the markets. So far, the wallet has downloaded 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 firm.
“Taking into account previous police liquidations such as the Silk Road case, they did not result in a sustained catastrophic price drop, which indicates that the market tends to maintain sufficient liquidity to absorb the liquidation,” Lai said.