Bitcoin Tumbles to Four-Month Lows as Mt. Gox Repayments Pressure Holders and Miners
Bitcoin took a tumble on Friday, dropping to around $56,340, hitting four-month lows. The reason behind this drop was the repayments being made by bankrupt cryptocurrency exchange Mt. Gox to its creditors. This caused holders of digital currencies and miners to feel the pressure. However, Bitcoin and other crypto assets managed to recover from their daily lows.
Mt. Gox, which was hacked in 2011 and declared bankruptcy in 2014 after losing over 600,000 bitcoins, began making large repayments to its creditors on Friday. In response, creditors started selling off their holdings.
As of Monday, Mt. Gox reportedly holds around 141,687 bitcoins, valued at nearly $9 billion. Creditors who received repayments are set to make a significant profit, considering that the cryptocurrency was worth only a few hundred dollars back in 2014.
Despite the recovery, Bitcoin retreated by 1.2% to $55,174 on late Friday afternoon, after being down nearly 6% earlier in the day. The cryptocurrency had reached a record high of $73,798 in mid-March and was trading at $65,000 in mid-June before losing momentum due to Mt. Gox’s repayments.
The impact of Mt. Gox’s situation was also felt in the stock market, with companies like Coinbase Global, MicroStrategy, Robinhood Markets, and Marathon Digital Holdings seeing declines in their stock prices.
Furthermore, leading ETFs like Van Eck Bitcoin Trust, Grayscale Bitcoin, IShares Bitcoin Trust, and Valkyrie Bitcoin were among the losers on Friday due to the Mt. Gox fallout. Coinbase, which serves as the custodian for many new ETF issuers, also felt the pressure.
Bitcoin’s fourth halving event on April 19, which reduced rewards for miners, has historically led to price increases in the months following the event. However, analysts are divided on the impact of this year’s halving event.
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