July 5 2024: Bitcoin’s price fell sharply to a four-month low on Friday, extending its recent slump as the defunct crypto exchange Mt Gox began repaying creditors.
Additionally, German police were seen moving about $75 million of cryptocurrency, confiscated from a piracy website, onto exchanges. This movement potentially signals a mass sale event, contributing to the negative sentiment.
Bitcoin slid 4.9% in the past 24 hours to $54,931.7, its weakest level since February. The token also dropped nearly 11% over the past seven days.
Mt Gox Starts Making Repayments
The sharp drop in Bitcoin’s price comes as investors focus on the payout of nearly $9 billion to users of the defunct bitcoin exchange Mt. Gox. Nobuaki Kobayashi, the trustee overseeing the Mt. Gox bankruptcy estate, announced that repayments in bitcoin and bitcoin cash had begun for some creditors through several designated crypto exchanges. However, he did not specify the exact amount transferred to these exchanges.
Kobayashi explained that the remaining funds would be distributed to creditors once certain conditions are met, including the validation of registered accounts and the completion of discussions between the trustee and the designated crypto exchanges. He emphasized that efforts are ongoing to ensure repayments are made “safely and securely,” urging eligible rehabilitation creditors to wait for a while.
The announcement follows the movement of a small amount of bitcoin from wallets linked to Mt. Gox, as reported by blockchain analytics firm Arkham Intelligence. The largest movement recorded was a $24 transfer to the Japanese crypto exchange Bitbank, which is among the platforms supporting the repayments.
Fears of Additional Sales by German Police Also Weighed
Broader cryptocurrency prices tracked steep declines in Bitcoin, with uncertainty over the U.S. presidential election and interest rates also contributing to weak sentiment toward crypto. Speculation that President Joe Biden may drop out as the Democratic candidate for the 2024 elections sparked some uncertainty among crypto markets, especially amid concerns that Biden might be replaced by a candidate even more averse to crypto.
Additionally, uncertainty before a key U.S. nonfarm payrolls reading kept traders cautious towards crypto, even as the dollar weakened on growing expectations of an interest rate cut in September.
Crypto markets largely lagged behind a rally in stocks, which they usually track. World no.2 token Ether slid 7.7% to $2,920.54, wiping out all its gains made in late May and hitting a near two-month low. XRP, SOL, and ADA dropped between 3% and 13%, while among meme tokens, SHIB and DOGE lost around 11% each.
Losses were also driven by low trading volumes due to the July 4 U.S. market holiday. But they also reflected steadily declining sentiment towards crypto, as hype over the approval of a spot Bitcoin exchange-traded fund dried up. Overall, the cryptocurrency market lost more than $170 billion in market capitalization over the past 24 hours, according to CoinGecko data.
Crypto Stocks Track Bitcoin’s Drop
Alongside altcoins, crypto-related stocks also followed Bitcoin’s declines on Friday. MicroStrategy Incorporated (NASDAQ), the largest publicly listed corporate holder of Bitcoin, saw its shares plummet more than 9%. Similarly, bitcoin miners Riot Platforms (NASDAQ) and Marathon Digital Holdings Inc (NASDAQ) plunged 7% and 6.3%, respectively. Additionally, CleanSpark Inc (NASDAQ) shares fell over 4.6%, Cipher Mining Inc (NASDAQ) slid 8.6%, and Coinbase Global Inc (NASDAQ) lost 6%.
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