The Cryptocurrency Market Bloodbath: Bitcoin (BTC) Retraces 20% As Mt. Gox Repayments And German Government Sell-Off Compound Selling Pressure

The cryptocurrency market experienced a substantial downturn on Friday, compounding the selling pressure witnessed over the past two weeks.

Bitcoin (BTC) and the broader cryptocurrency market experienced a substantial sell-off on Friday, continuing the selling pressure that has plagued the space for the last two weeks. The leading cryptocurrency experienced a retracement of over 20% from its highs in June and May, dropping as low as $53,500.

The sell-off in the crypto market amounted to over $170 billion in combined market capitalization being wiped out in just 24 hours, as a result of the long-awaited trustee overseeing the Mt. Gox bankruptcy finally announcing the commencement of Bitcoin and Bitcoin Cash repayments to creditors that were affected by the infamous hack that led to billions in losses.

Bitcoin Repayments And German Government Sell-Off Begin

The trustee responsible for the Mt. Gox bankruptcy estate, Nobuaki Kobayashi, announced that Bitcoin and Bitcoin Cash repayments had begun through designated crypto exchanges.

While the amount that was transferred to these exchanges was not specified, data from market intelligence platform Arkham showed that 47,229 BTC, valued at $2.71 billion, were transferred to an unknown address, as observed on an etherscan block explorer.

Kobayashi stated that the remaining funds would be returned to creditors after meeting “specific conditions,” which included verifying registered accounts and finalizing discussions with the designated exchanges.

The decline in crypto prices led to substantial liquidations in the derivatives markets, with over 229,755 traders experiencing combined liquidations worth $639.58 million in the past 24 hours. Of this amount, $540.46 million represented long trades, indicating positions taken by investors expecting long-term asset appreciation.

Furthermore, the German government sold approximately 3,000 BTC, which is equivalent to around $175 million, from a seized stash of 50,000 BTC that was linked to the movie piracy operation Movie2k. Despite this sell-off, the government still holds over 40,000 BTC, valued at over $2 billion.

Historical Price Cycles May Suggest Further Growth Despite Recent Sell-Off

In spite of the ongoing bloodbath that crypto prices have experienced over the past month, industry insiders and analysts are still optimistic about how Bitcoin will perform in the future.

Despite the short-term selling pressure that is being caused by the Mt. Gox repayments, experts are still anticipating a rebound towards the end of the year. Crypto data and research firm CCData suggested that Bitcoin’s current appreciation cycle has not yet peaked and will likely achieve a new all-time high.

suggesting that it will likely achieve a new all-time high.

Historical market cycles indicate that Bitcoin’s Halving event, which reduces the supply of new BTC, typically precedes a period of price expansion between 12 and 18 months. The most recent Halving occurred in April, suggesting potential further growth into 2025.

Tom Lee, co-founder and head of research at Fundstrat Global Advisors, told CNBC that he predicts that Bitcoin will hit $150,000 despite the Mt. Gox overhang, and that he is “bullish on Bitcoin for the next six months.”

The launch of an Ethereum exchange-traded fund (ETF) in the US and the approval of the first US spot Bitcoin ETF earlier this year contribute to the overall positive sentiment in the market, indicating potential growth and further mainstream adoption of cryptocurrencies.

At the time of writing, BTC is trading at $55,680, reflecting a significant 21% drop in price over the past month. Bulls in the market are closely monitoring the $54,480 price level, representing substantial support for BTC. This level holds critical importance as it could prevent further price declines and the risk of breaking below the crucial $50,000 level.

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