Mt. Gox Announces Commencement of Creditor Repayments
In recent days, the contrast between the cryptocurrency market and the soaring Taiwan Stock Exchange could not be starker. While the cryptocurrency market is shrouded in uncertainty and gloom, the price of Bitcoin has been continuously plummeting. It has not only breached the $60,000 milestone but further dipped below the $55,000 mark, sparking concerns among investors.
Bitcoin has been on a downward trend since June. According to data from CoinMarketCap, as of the time of writing, Bitcoin has dropped by 5% in the last 24 hours to reach $55,522, with a weekly decline of 9.39%.
The recent decline in Bitcoin prices is likely tied to the announcement by the Bitcoin exchange Mt. Gox regarding the commencement of repayments to creditors. Charles Edwards, the founder of the Bitcoin hedge fund Capriole Investments, mentioned on social media that a significant amount of Bitcoin has been observed moving on the blockchain, indicating that Mt. Gox might be gearing up to repay its debts.
Why is Bitcoin Falling?
Mt. Gox to Begin Repayment Process
Established in Shibuya, Tokyo, Japan in 2010, Mt. Gox was once the largest global Bitcoin exchange, handling over 70% of Bitcoin transactions worldwide. However, in February 2014, Mt. Gox fell victim to a massive Bitcoin theft by hackers, which significantly impacted its operations. Consequently, on February 24th, 2014, Mt. Gox filed for bankruptcy protection in Japan, leaving over 127,000 creditors owed more than $900 million worth of Bitcoin, back when the price of Bitcoin was below $1,000.
Over a decade later, these creditors have been waiting for compensation from Mt. Gox. Finally, on June 24th of this year, Mt. Gox announced that it would start repaying creditors in the form of Bitcoin (BTC) and Bitcoin Cash (BCH) starting from July.
However, the reception of these repayments may not bode well for investors. Why would this impact Bitcoin and the cryptocurrency market negatively?
Analysts believe that these creditors have waited for over a decade to recover their funds, and many investors might choose to cash out profits that have been sitting idle for years. In simple terms, when investors sell off their cryptocurrencies to cash in, a significant amount of Bitcoin is released into the market, creating substantial selling pressure and increasing the selling pressure further.
German Government Sells Approximately 10,000 BTC in Two Weeks
In addition to this, at the beginning of this year, German authorities confiscated 50,000 Bitcoins (worth $21.7 billion at the time), with one suspect voluntarily transferring the Bitcoins to the Federal Criminal Police Office (BKA).
In June, approximately 9,600 Bitcoins from the confiscated stash were put up for sale. Recently, the German government transferred 1,300 Bitcoins to cryptocurrency exchanges Kraken and Coinbase and 1,700 Bitcoins to anonymous wallets.
Miguel More, CEO of the blockchain data tracking platform Arkham, suggested that transfers from wallets to exchanges might indicate an intention to sell tokens.
Facing the imminent large sell-off, a shadow has cast over the confidence in the upcoming cryptocurrency market.
References: Cointelegraph, Coindesk
