Bitcoin’s ($BTC) value experienced a significant drop, falling to $57,000 late Thursday. It then reached a low of $53,800 early Friday, according to TradingView data.
This comes on the back of Mt. Gox’s repayment which started today, ending a nearly decade-long wait for some users to get their crypto back.
The repayment initiative stems from its complex bankruptcy proceedings.
Mt. Gox was once a dominant force in the cryptocurrency exchange world. However, the firm filed for bankruptcy after a massive security breach in 2014 that resulted in the loss of 850,000 Bitcoins.
On Thursday evening, a wallet controlled by the now-defunct crypto exchange transferred 47,229 $BTC, valued at around $2.7 billion, to a new hot wallet, as indicated by Arkham’s data.
The recent wallet activity is part of Mt. Gox’s trustee plan to distribute over $9 billion in Bitcoin, Bitcoin Cash ($BCH), and fiat to creditors starting in July.
This plan was publicly disclosed last month. Bitcoin’s bearish momentum has been aggravated by these movements.
This comes alongside added pressure from recent Bitcoin transfers by the German and US governments.
According to CoinShares, Mt. Gox’s creditor repayment could trigger panic sales across crypto markets.
The worst-case scenario predicts a 19% daily drop if all $BTC is sold simultaneously, though this outcome is considered unlikely.
As Bitcoin loses momentum, the altcoin market also suffers. Ethereum ($ETH) plunged below $3,000, shedding 10% in the last day.
Binance Coin ($BNB) and Toncoin ($TON) dropped 12% and 13%, respectively. Dogecoin ($DOGE) and Cardano ($ADA) both fell 15%, while TRON ($TRX) decreased by 3.5%.
Fear has gripped the crypto market, reflected in the Fear and Greed Index dropping to 29, as per data from Alternative.me.
Much panic as liquidations soar
Liquidations in the crypto market have reached their highest level since the FTX collapse.
CoinGlass data shows that $675 million worth of crypto has been liquidated in the past 24 hours.
Long positions accounted for the majority of these liquidations, totaling $578 million. More than $227 million worth of crypto was liquidated in just the past four hours.
The largest single liquidation occurred on the Binance exchange, where a trader lost $18 million.
Bitcoin saw the highest liquidation amount with $184 million in long positions and $41 million in short positions being wiped out.
Ethereum and Solana ($SOL) followed in second and third places, respectively, with Dogecoin also appearing in the top five.
The recent market plunge, driven by the Mt. Gox Bitcoin distribution has put the market under severe selling pressure.
However, pseudonymous trader DonAlt predicted that Bitcoin is unlikely to return to the $60,000 level soon and suggested the top of the current cycle may already be in.
A surge in BTC’s realised losses
Bitcoin’s recent price dip to below $54,000 has triggered one of the largest realised losses since the FTX collapse.
On 5 July, within a one-hour resolution, Bitcoin’s aggregated realised loss soared to $814 million.
Short-term holders, those who held Bitcoin for one to three months, incurred $587 million of these losses.
This sell-off highlights the vulnerability of short-term holders compared to their long-term counterparts.
On 4 July, short-term holders were found to be holding 2.5 million $BTC at a loss, indicating a greater risk to Bitcoin’s stability than the impact of Mt. Gox.
Despite the turmoil, long-term holders showed resilience, contributing minimally to the selling pressure.
This stability from seasoned investors indicates confidence in Bitcoin’s long-term prospects.
It also contrasts sharply with the short-term market fluctuations driven by immediate news events.
