The Bitcoin price plunged this week, sinking below $55,000 for the first time since February as the now-defunct Mt Gox exchange began distributing billions in owed funds.
Mt Gox announced it has started repaying creditors, ending years of waiting stemming from its 2014 collapse. The Japan-based exchange will distribute approximately $9 billion worth of Bitcoin, Bitcoin cash, and fiat currency.
The news added heavy selling pressure on Bitcoin, which fell over 6% on Friday to trade near $54,000. The broader Bitcoin and crypto market shed over $170 billion in 24 hours amid the declines.
On Thursday evening, Mt Gox moved around 47,000 Bitcoin worth nearly $2.7 billion from cold storage wallets to a separate address. While intentions remain uncertain, the transfer fueled concerns creditors may sell portions of recovered coins.
The payouts come after protracted bankruptcy proceedings for Mt Gox, which suffered a massive hack in 2014 that resulted in 850,000 Bitcoin being lost. It was the largest crypto exchange at the time, handling 70% of all Bitcoin transactions.
The repayment of creditors marks a major step toward resolving Mt Gox’s decade-long insolvency case. However, the influx of previously lost coins threatens to shift supply and demand dynamics.
Some analysts estimate selling pressure from payouts could push Bitcoin’s price as low as $50,000 in the near term. Ongoing transfers from the German government have also weighed on the market.
However, others argue the amounts equate to a small fraction of daily Bitcoin trading volumes. They say most creditors are long-term investors unlikely to dump holdings en masse, limiting impacts.
Nonetheless, analysts widely expect significant volatility ahead between Mt Gox distributions and the start of German government sales in July.
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