Mt. Gox Distribution Leads to BTC Hitting $54K: A Four-Month-Low

After ending in the red last week, the fall in Bitcoin’s (BTC) fortune due to the distribution plan of the defunct Japanese cryptocurrency exchange Mt. Gox is still carrying on.  

The drop in BTC’s value that began around the announcement of Mt. Gox in the last week of June expanded well into the second week of July.

On 24 June, Mt. Gox announced it will be distributing Bitcoin and Bitcoin Cash in July that were stolen from the wallets of its customers.

Since the announcement, the value of Bitcoin has continued to fall amid minor corrections.

It might be difficult for many of our readers to understand how a single exchange can lead to such a drastic decline in Bitcoin’s performance.

For this purpose, it’s important for us rewind the clock and go back to the earlier history of the Bitcoin ecosystem. 

Looking Back

The king coin debuted in 2009 and Mt. Gox, a Tokyo-based crypto exchange, started operating in 2010.

Not many remember, but during 2013-14, it even became the world’s largest Bitcoin intermediary and the largest crypto exchange.

At one point, it was handling over 70% of Bitcoin trades worldwide.

However, the exchange was hit with crypto hacks during 2011-14, resulting in the total loss of an estimated 740,000 Bitcoin (worth $15 billion currently). Subsequently, the exchange was forced to file for bankruptcy.

After a wait of roughly 10 years, customers of the exchange will finally be receiving their stolen digital assets. 

• It is worth noting that those customers will receive these digital assets at the current value (~$60K), while they had purchased them at a much lower price ($100-$300) back in 2010-14.

   

• It will cost Mt. Gox $9 billion to process all the payouts. 

On 5 July, the exchange moved 47,228 BTC as it began the process of distribution. In worst case scenarios, some customers might have wait as much as 60-90 days to receive their payouts.

Mt. Gox will have to divest some of its holdings to fund the payouts, which has put selling pressure on Bitcoin markets. 

• BTC is still below the price mark of $60K due to the distress, and even hit as low as $54K—its lowest in four months.
• It was only in March 2024 that BTC hit its all-time high (ATH) of $73,750.07. 

Further Anxiety Fuelled by German Govt's Spending

Meanwhile, the German Federal Criminal Police Office (BKA) has been selling Bitcoin worth millions seized by the German Federal Criminal Police Office from a film piracy website.

As per Arkham Intelligence, BKA has sold more than half of the nearly 50,000 BTC it had seized; it still holds more than 26,000 BTC worth $1.4 billion. 

Source: Arkham Intelligence
 

Anxiety around the upcoming monetary policy in the U.S.  is currently spreading in the market...

• The market is anticipating the latest U.S. Consumer Price Index (CPI) report this week.
• Federal Reserve chair Jerome Powell will also testify to Congress this week, which is set to throw light on the monetary policy the central bank will pursue in the next few months. 

Bitcoin ETFs See $300m in Inflows

Nonetheless, despite the negative market sentiment, there is a silver lining to the whole phenomenon.

Bitcoin exchange-traded funds (ETFs) in the U.S. witnessed around $300 million in new inflows on 8 July as traders seem to be buying the dip. 

Source: SoSoValue

It was the highest buying activity of Bitcoin ETFs since early June when BTC’s price was more than $70K.

BTC was trading at $57,732.76 at press time, a loss of more than 20% since its ATH.

With Bitcoin being at its lowest point in four months, market sentiment is left wondering whether we have hit rock bottom, or is there more to come?