The price of Bitcoin fell this week, sinking below $55,000 for the first time since February as the now-defunct Mt Gox exchange began distributing billions in debt.
Mt Gox has announced that it has begun repaying creditors, ending years of waiting since its collapse in 2014. The Japan-based exchange will distribute approximately $9 billion in Bitcoin, Bitcoin cash, and fiat currency.
The news added heavy selling pressure to Bitcoin, which fell more than 6% on Friday to trade near $54,000. The broader Bitcoin and crypto market lost more than $170 billion in 24 hours during the downturn.
On Thursday evening, Mt Gox moved about 47,000 Bitcoin worth about $2.7 billion from cold storage to a different address. Although the intentions remain uncertain, the transfer has fueled concerns that creditors may sell off parts of the recovered coins.
These payments come after the protracted bankruptcy proceedings of Mt Gox, which was hacked in 2014 resulting in the loss of 850,000 Bitcoin. It was the largest crypto exchange at the time, handling 70% of all Bitcoin transactions.
The settlement of creditors marks a major step in resolving Mt Gox’s decade-long bankruptcy case. However, the influx of previously lost coins threatens to change the supply and demand of energy.
Some analysts estimate selling pressure from fees could push Bitcoin’s price as low as $50,000 in the near term. Continued transfers from the German government have also weighed on the market.
However, others argue that the amounts amount to a small fraction of Bitcoin’s daily trading volume. They say most of the creditors are long-term investors who cannot dispose of holdings in bulk, limiting the effects.
Still, analysts widely expect significant volatility between the distribution of Mt Gox and the start of the German government sale in July.
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