Bitcoin fell 3% as traders monitored transfers by wallets belonging to the failed Mt. Gox exchange, whose administrators are returning a $9 billion hoard of bitcoin to creditors starting in July.
The price of bitcoin dipped below $59,000 on Thursday, currently trading at $58,827, according to The Block's bitcoin price page. The cryptocurrency has shed 3.38% in the last 24 hours to reach its lowest levels since early May, despite market anticipations of a price rebound.
"The fall below the $60,000 resistance line is significant as it marks a psychological barrier for many investors," said Rachael Lucas, crypto analyst at Australia's BTC Markets exchange. "If bitcoin remains below this level, we could see increased volatility in the short term."
The imminent payout for creditors of collapsed cryptocurrency exchange Mt. Gox, who are expected to receive around 142,000 BTC, worth about $9 billion, starting in July, is largely attributed to bitcoin's recent volatility. The significant repayment in bitcoin will add "substantial selling pressure" to the market as it absorbs the additional supply.
Around 8 p.m. EST on Thursday, defunct crypto exchange Mt Gox moved nearly 47,229 BTC ($2.71 billion) from its cold storage to another wallet address, causing bitcoin's price to fall further below the $57,000 mark.
"Although creditors will likely sell their BTC from Mt Gox, the selling pressure may not be as big as many expect, since creditors could have sold their claims earlier on bankruptcy claim markets," said Nick Ruck, head of growth of BitU Protocol. "Bitcoin is perhaps the most liquid digital asset market that can absorb this pressure, and there is still demand for cheaper prices in the short term, as many expect a continued bull market in the long run."
Peter Chung, head of research at Presto Research, explained that the Mt Gox repayment is set to take place between July and October, "so one can use that as a reference" when it comes to how long the selling pressure might last. He added that the selling pressure will be stronger for BCH than BTC, given BCH doesn't have a strong investor base like BTC, and its market liquidity is much thinner than BTC — as low as 1/50th.
Analysts at JP Morgan said last week that they expect Mt Gox creditors to sell part of their bitcoin receivables, which in turn would pressure the market. Nonetheless, the analysts said they anticipate a recovery from August.
Mt. Gox, established in 2010, operated the largest bitcoin exchange in the world until the platform suffered a major hack in 2014, resulting in the loss of at least 850,000 bitcoin. The ongoing process to return these stolen assets to their rightful owners has been a significant factor in the Bitcoin market.
Despite the current downturn, the long-term outlook for Bitcoin remains positive, with many experts predicting continued growth in the digital asset's value. The potential return of the stolen Bitcoin to the market could have a significant impact on the price and liquidity of the cryptocurrency, making it an intriguing area of focus for market participants.
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