The Bitcoin price took a hit this week, dropping below $55,000 for the first time since February as the infamous Mt Gox exchange began distributing billions in owed funds to creditors.
Mt Gox, which collapsed in 2014 after a massive hack that resulted in the loss of 850,000 Bitcoin, announced that it has started repaying creditors with approximately $9 billion worth of Bitcoin, Bitcoin cash, and fiat currency. This news sent shockwaves through the market, with Bitcoin falling over 6% on Friday to trade near $54,000 and the broader crypto market shedding over $170 billion in just 24 hours.
The transfer of around 47,000 Bitcoin worth nearly $2.7 billion from cold storage wallets to a separate address by Mt Gox on Thursday evening raised concerns that creditors may sell portions of the recovered coins, adding to the selling pressure on Bitcoin.
While the repayment of creditors marks a significant step towards resolving Mt Gox’s insolvency case, the influx of previously lost coins threatens to impact supply and demand dynamics in the market. Some analysts predict that the selling pressure from the payouts could push Bitcoin’s price as low as $50,000 in the near term.
Despite the potential for volatility ahead, some experts believe that most creditors are long-term investors who are unlikely to dump their holdings en masse, which could help limit the impacts on the market. However, with ongoing transfers from the German government also weighing on the market, analysts anticipate significant fluctuations in the coming months.
As Mt Gox continues to distribute funds and the German government prepares to sell its holdings in July, the crypto market is bracing for a period of uncertainty and volatility. Stay tuned for updates on how these developments will shape the future of Bitcoin and the broader cryptocurrency landscape.
