The price of bitcoin plummeted this week, falling below $55,000 for the first time since February when the now-defunct Mt Gox exchange began distributing billions in owed funds.
Mt. Gox announced It has begun paying its creditors, ending years of waiting following its collapse in 2014. The Japan-based exchange will distribute approximately $9 billion in bitcoin, bitcoin Cash and fiat currency.
The news added heavy selling pressure to bitcoin, which fell more than 6% on Friday to trade near $54,000. The broader bitcoin and cryptocurrency market lost more than $170 billion in 24 hours amid the declines.
On Thursday evening, Mt Gox moved around 47,000 bitcoin worth nearly $2.7 billion from x.com/ArkhamIntel/status/1809023951932162227″>Cold storage wallets to a separate addressAlthough intentions remain unclear, the transfer fueled fears that creditors could sell off parts of the recovered coins.
The payments come after a lengthy bankruptcy process for Mt Gox, which suffered a massive hack in 2014 that resulted in the loss of 850,000 bitcoins. It was the largest cryptocurrency exchange at the time, handling 70% of all bitcoin transactions.
The payment to creditors marks a major step towards resolving Mt Gox’s decade-long insolvency case. However, the influx of previously lost coins threatens to change the dynamics of supply and demand.
Some analysts estimate that selling pressure from payments could push the price of bitcoin down to $50,000 in the short term. Ongoing transfers from the German government have also weighed on the market.
Others, however, argue that the amounts amount to a small fraction of daily bitcoin transaction volumes. They say most creditors are long-term investors who are unlikely to dump their holdings en masse, limiting the impacts.
However, analysts generally expect significant volatility between Mt Gox distributions and the start of German government sales in July.
