Cryptocurrencies fell on Friday as investors focused on paying out nearly $9 billion to users of collapsed bitcoin exchange Mount Gox.
Bitcoin’s price was last down nearly 3% to $56,571.00, according to Coin Metrics. Earlier in the day, the world’s largest cryptocurrency fell as low as $53,513.55, trading below the $55,000 level for the first time since February 27.
Rival token ether, meanwhile, fell about 5% to $2,971.68.
At one point, the entire cryptocurrency market shed more than $170 billion in combined market capitalization in a 24-hour period, according to CoinGecko data.
On Friday, the trustee for the Mt Gox bankruptcy estate, Nobuaki Kobayashi, said in a statement that he had begun making repayments in bitcoin and bitcoin cash to some of the creditors through a number of designated crypto exchanges.
Mt. Gox’s trustee did not specify how much money was transferred to these exchanges.
He noted that the remaining funds will be returned to creditors once a series of conditions are met, including the confirmation of the validity of registered accounts and the completion of discussions between the trustee and the designated crypto exchanges.
The trustee is still working to ensure repayments “can be made safely and securely,” Kobayashi wrote, and “requested appropriate rehabilitation creditors to wait a while.”
It comes after a small amount of bitcoin was moved out of wallets linked to Mount Gox, according to blockchain analytics firm Arkham Intelligence, with the largest move a $24 transfer to Japanese crypto exchange Bitbank.
Bitbank is one of the receivers listed to support refunds.
Recently, the world’s largest cryptocurrency has been pressured by news of the collapsed bitcoin exchange Mount Gox preparing to distribute approximately $9 billion worth of coins to users.
This dumping of coins on the market is expected to lead to a significant selling action.
The slump in crypto prices has led to heavy liquidations in the derivatives markets, according to crypto data firm Coinglass, which suggests that 229,755 traders liquidated their positions worth a combined $639.58 million in the past 24 hours. Of this amount, $540.46 million represented long trades – financial positions taken when an investor expects the price of an asset to appreciate over the long term.
The German government, which has also been under pressure from crypto markets, on Thursday sold about 3,000 bitcoins — worth about $175 million at today’s prices — out of a 50,000-bitcoin hoard seized in connection with the movie piracy operation Movie2k, according to Arkham Intelligence.
Arkham, which monitors Germany’s bitcoin wallet, noted that the government still holds more than 40,000 bitcoins worth more than $2 billion.
Industry insiders still expect bitcoin prices to climb again by the end of the year, once the expected short-term selling pressure from the Mt. Gox refunds.
Analysts at crypto data and research firm CCData said in a report on Tuesday that bitcoin has not yet reached the top of its current appreciation cycle and is likely to reach a new high.
Historical market “cycles” have shown that bitcoin’s so-called halving event — which cuts the supply of new bitcoins to the market — has always preceded a period of price expansion that can last between 12 and 18 months “before a cycle top is produced.” CCData said in its report.
The last bitcoin halving happened on April 19th of this year, so those historic time frames have yet to pass.
“Furthermore, we observed a decrease in trading activity on centralized exchanges for nearly two months after the halving event in previous cycles, which appears to have mirrored this cycle. This suggests that the current cycle may extend further into 2025,” CCData said.
Tom Lee, co-founder and head of research at Fundstrat Global Advisors, told CNBC’s “Squawk Box” on Monday that he still sees bitcoin hitting $150,000 despite the “hangover” from Mt Gox’s upcoming payout of tokens to creditors.
“If I was invested in crypto, knowing that one of the biggest overhangs was going to disappear in July, I would think that’s a reason to actually expect a pretty sharp pullback in the second half,” Lee said.
Investors are still awaiting the launch of an ether exchange-traded fund in the US, which will follow the approval of the first US spot bitcoin ETF in January.
In May, the US Securities and Exchange Commission approved a rule change that will pave the way for ETFs that buy and hold ether.
VanEck, BlackRock, Bitwise and Galaxy Digital are among the companies looking to launch their own ether ETFs.
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