CoinDesk Report:
Rumors of major Bitcoin sales by creditors of the prominent exchange Mt. Gox have added fuel to the already-profit-taking vortex engulfing the cryptocurrency market.
On Friday, Bitcoin briefly dropped 8% to $53,523, marking its lowest point since late February this year. Even more staggering, Bitcoin has seen a cumulative decline of over 13% this week, its largest weekly drop since FTX collapsed in November 2022.
Located in Tokyo, Japan, Mt. Gox was once among the world’s largest Bitcoin exchanges, handling over 70% of global Bitcoin transactions at one point. Following a scandal involving the theft of Bitcoins, Mt. Gox declared bankruptcy in 2014.
Now, media reports suggest Mt. Gox has begun returning Bitcoins to its creditors, who are likely to sell these assets given their substantial appreciation since 2014.
According to blockchain analysis firm Arkham Intelligence, earlier on Friday, Mt. Gox transferred 47,228 Bitcoins (worth approximately $2.6 billion) from a cold wallet to a new wallet. This indicates the exchange’s plan to distribute assets stolen during the 2014 hack back to its customers.
Last month, Mt. Gox announced it would settle its debts by paying with 140,000 Bitcoins (worth $7.73 billion), 143,000 Bitcoin Cash (BCH), and Japanese yen. Since then, traders have been concerned that creditors waiting a decade for repayment might immediately sell, thereby exerting significant selling pressure on the market. It’s worth noting that at the time of Mt. Gox’s hacking in 2014, Bitcoin was priced around $600; today, it exceeds $54,000.
IG Market Analyst Tony Sycamore commented that selling pressure remains linked to Mt. Gox creditors’ actions. However, Bitcoin’s accelerated decline suggests the market is trying to anticipate creditor moves.
Analysts also pointed out concerns regarding the potential impact of Joe Biden’s poor debate performance on cryptocurrency-friendly policies compared to Donald Trump’s potential re-election as the next US President.
Additionally, Antoni Trenchev, co-founder of crypto platform Nexo, noted the significance of Bitcoin’s recent drop occurring while US stocks and global indices are at or near historic highs—the correlation between Bitcoin and mainstream markets is weakening.
Bitcoin showed strong performance earlier in the year following the launch of a US spot ETF, hitting a historic high of $73,803.25 in mid-March but has since steadily declined, dropping below $60,000 in late June.
Currently, traders are anxiously awaiting Friday’s release of the US non-farm payrolls report. Wall Street expects job gains for June to drop significantly to 190,000 from May’s 272,000, just slightly above April’s figures. Average hourly earnings are expected to fall below 4% year-on-year for the first time since 2021. Analysts believe that if the results meet expectations, the Federal Reserve will have enough evidence to begin cutting rates in September.
The CME Group’s FedWatch tool shows that traders have nearly priced in two rate cuts this year since last Friday’s soft PCE inflation data release.
Jag Kooner, derivatives director at cryptocurrency exchange Bitfinex, stated that if Friday’s employment data shows weaker-than-expected job growth, expectations for dovish policies supporting risk assets could further strengthen.
A weaker-than-expected non-farm payrolls report could solidify expectations for future rate cuts, potentially boosting Bitcoin prices as investors seek alternative assets amidst anticipated loose monetary policies. Kooner also suggested that a belief among market participants in economic uncertainty driving Fed rate cuts could accelerate flows into spot Bitcoin ETFs.