TLDR
- Bitcoin price dropped below $55,000, reaching a 4-month low
- Mt. Gox began distributing approximately $9 billion in Bitcoin to creditors
- Multiple factors contributed to the price drop, including ETF outflows and high interest rates
- The crypto market saw nearly $700 million in liquidations
- Bitcoin whales have been selling, with over 30,000 BTC sold in the past month
The market has had another pullback today, with Bitcoin leading the decline. The world’s largest cryptocurrency by market cap fell below $55,000, reaching its lowest point in four months.
The primary catalyst for this market movement appears to be the long-awaited distribution of funds by Mt. Gox, a defunct cryptocurrency exchange that collapsed in 2014.
After a decade-long wait, Mt. Gox began repaying its creditors with Bitcoin and Bitcoin Cash through various crypto exchanges. Blockchain intelligence firm Arkham reported that Mt. Gox moved 47,228 BTC, valued at approximately $2.71 billion, from cold storage to a new wallet.
This sudden influx of Bitcoin into the market has created uncertainty and selling pressure. Many investors fear that Mt. Gox creditors, upon receiving their funds, may choose to sell their Bitcoin, potentially flooding the market with supply and driving prices down further.
However, the Mt. Gox situation is just one of several factors contributing to the current market downturn:
- Outflows from Bitcoin ETFs: Investors have been withdrawing funds from Bitcoin exchange-traded funds, reducing demand for the cryptocurrency.
- Miner selling pressure: Following the Bitcoin halving in April, miners are receiving fewer rewards and may be selling their Bitcoin to cover operational costs.
- High interest rates: The U.S. Federal Reserve’s decision to maintain high interest rates makes risky assets like cryptocurrencies less attractive to investors.
- Government selling: The German government has been selling its Bitcoin holdings, adding to the market supply.
These combined factors have led to a significant decline in Bitcoin’s price. Over the past week, Bitcoin fell from $63,000 to $57,000, and in a single day, it reached a low of $53,680.23. This represents a stark contrast to the all-time high of $73,803.25 achieved in mid-March, marking a decline of over 21% since then.
Ethereum, the second-largest cryptocurrency, also experienced a sharp decline, falling 8% to $2,891, its lowest point in one and a half months. The total cryptocurrency market capitalization has fallen to $1.99 trillion, representing an 8% decrease in just 24 hours.
This sell-off has resulted in massive liquidations across the crypto derivatives market.
According to data from Coinglass, crypto liquidations reached $678 million in a 24-hour period. Bitcoin-related liquidations accounted for over $230 million, while Ethereum saw more than $167 million in liquidations. Long traders were particularly hard hit, with approximately $590 million in long positions being liquidated.
The market downturn has also affected large investors, commonly known as “whales.”
PeckShield analysis revealed that several crypto whales were liquidated in their lending positions. For instance, one whale using the Compound protocol had 173,000 Ethereum (worth about $10 million) liquidated. Similar cases were observed with Bitcoin whales who had used the cryptocurrency as collateral for loans.
On-chain data shows that Bitcoin whales have been on a selling spree over the past month, offloading more than 30,000 BTC, worth over $1.8 billion. This selling pressure from large holders has likely contributed to the overall market decline.
