Bitcoin is experiencing its largest weekly drop in over a year, as concerns grow about the potential sale of tokens from the defunct Japanese exchange Mt. Gox and increased selling by leveraged traders following the cryptocurrency’s recent strong performance.
The price of Bitcoin fell by as much as 8% to $53,523, reaching its lowest point since late February. It is heading for a decline of more than 12% for the week, its biggest since early November 2022. Similarly, Ether, a rival cryptocurrency, dropped 9% to $2,841, hitting a low not seen in over two months. Reports suggest that Mt. Gox, once the world’s leading cryptocurrency exchange before its collapse a decade ago, may begin returning Bitcoin to creditors, who are expected to sell the tokens since their value was only in the hundreds of dollars back in 2014. According to Tony Sycamore, a market analyst at IG, the selling pressure is linked to creditors from the failed Mt. Gox exchange. He also mentioned that the market seems to be anticipating the selling pressure from these creditors.
Furthermore, there are concerns about the possibility of Joe Biden, who is perceived as pro-crypto, being replaced as the Democratic presidential nominee. This concern arose after a shaky debate performance with rival candidate Donald Trump. Antoni Trenchev, co-founder of crypto platform Nexo, pointed out that Bitcoin’s slide is significant since global equity indexes are at or near record highs, indicating that the correlation between Bitcoin and mainstream equities is weakening.
Bitcoin had a strong start to the year after the launch of exchange-traded funds in the U.S., reaching a record high of $73,803.25 in mid-March. However, it has since encountered difficulties. According to Justin D’Anethan, a digital assets market maker at Keyrock, the decline could be attributed to a large number of leveraged positions, causing a cascading effect and driving prices lower than they would in a less leveraged market.