Crypto Market Shaken as Mt. Gox’s Repayment Process Triggers Sell-Off
Bitcoin’s value plunged to its lowest level since February early on Friday, amid a broader cryptocurrency market sell-off. The decline is attributed to the defunct crypto exchange Mt. Gox initiating the repayment process to its creditors, sparking concerns of a potential liquidation surge.
Key Facts:
- Price Drop: Bitcoin, the world’s most valuable cryptocurrency, briefly fell below $54,000 in early morning trading on Friday before stabilizing slightly above that mark. In the past 24 hours, Bitcoin’s value has decreased by over 6.7%, and it has dropped more than 11% compared to last week.
- Broader Market Impact: The sell-off has affected other cryptocurrencies as well. Ether’s price dipped below $2,900, down more than 9%, while Binance’s BNB and Solana experienced declines of 11% and 5.8%, respectively.
- Repayment in Bitcoin and Bitcoin Cash: Mt. Gox will repay its creditors not only in Bitcoin but also in Bitcoin Cash. Over the past week, Bitcoin Cash’s value has plummeted nearly 25%.
Key Background:
On Friday, the administrators of Mt. Gox, which went bankrupt in 2014, announced the start of the creditor repayment process as per their “Rehabilitation Plan.” The repayments, expected to be staggered, will total approximately 140,000 Bitcoins (valued at $7.6 billion) and 143,000 Bitcoin Cash (BCH) tokens (valued at $42.5 million). On Thursday evening, Mt. Gox moved around 47,228 Bitcoins (worth $2.71 billion) from cold storage into a new wallet.
The considerable size of the payout has raised fears that creditors might liquidate a portion of the returned assets, potentially driving down cryptocurrency prices further. Before its collapse, Mt. Gox was the largest cryptocurrency exchange globally, accounting for 70% of all Bitcoin transactions in 2013.
Big Number:
23.56% – This is the percentage by which Bitcoin’s price has fallen in the past 30 days. The slump follows Bitcoin reaching an all-time high of over $73,700 in March, a peak largely driven by regulatory approval and the launch of spot Bitcoin exchange-traded funds.
Conclusion:
The recent drop in Bitcoin’s value underscores the volatility and sensitivity of the cryptocurrency market to large-scale financial movements, such as the Mt. Gox repayments. As the repayment process continues, market watchers will be keenly observing the potential impacts on Bitcoin and other cryptocurrencies. This event serves as a stark reminder of the lasting effects that historical market events can have on current market dynamics.
