Blogs & Articles: Bitcoin Price Drops as Mt. Gox Begins Repayments 🔗 9 weeks ago

Bitcoin's price dropped this week, falling below $55,000 for the first time since February, as the defunct Mt. Gox exchange began distributing billions in owed funds.

Mt. Gox announced it has started repayments to creditors, ending years of waiting since its 2014 collapse. The Japan-based exchange will distribute roughly $9 billion worth of Bitcoin, Bitcoin Cash, and fiat currency.

This news added selling pressure on Bitcoin, which fell over 6% on Friday to around $54,000.

On Thursday evening, Mt. Gox moved approximately 47,000 Bitcoin, valued at nearly $2.7 billion, from cold storage wallets to a separate address. The exact intentions are unclear, but the transfer raised concerns that creditors might sell portions of the recovered coins.

The payouts follow extended bankruptcy proceedings for Mt. Gox, which experienced a hack in 2014 resulting in the loss of 850,000 Bitcoin. At the time, it was the largest Bitcoin exchange, handling 70% of all Bitcoin transactions.

Repaying creditors is a significant step in resolving Mt. Gox's insolvency case. However, the influx of previously lost coins may affect supply and demand dynamics.

Some analysts predict the selling pressure from these payouts could push Bitcoin's price down to $50,000 in the near term. Continued transfers from the German government have also impacted the market.

Others argue the amounts represent a small fraction of daily Bitcoin trading volumes. They believe most creditors are long-term holders unlikely to sell their holdings quickly, which would limit the impact.