Bitcoin fell this week, falling below $55,000 for the first time since February, as the now-defunct Mt Gox exchange began distributing billions of dollars in outstanding funds.
Mt Gox Announced It has begun paying off creditors, ending years of waiting caused by its collapse in 2014. The Japan-based exchange will distribute about $9 billion worth of bitcoin, bitcoin cash and fiat currencies.
The news added significant selling pressure to bitcoin, which fell more than 6% on Friday to trade at around $54,000. The broader cryptocurrency market lost more than $170 billion in 24 hours amid the declines.
On Thursday evening, Mt Gox moved about 47,000 bitcoins worth nearly $2.7 billion from Cold storage wallets to separate addressWhile the intentions remain uncertain, the transfer has raised concerns that creditors may sell portions of the recovered coins.
The payments come after a lengthy bankruptcy process for Mt Gox, which suffered a massive hack in 2014 that resulted in the loss of 850,000 bitcoins. It was the largest cryptocurrency exchange at the time, handling 70% of all bitcoin transactions.
Paying off creditors is a major step toward resolving Mt Gox’s decade-long bankruptcy case. However, the influx of previously lost coins threatens to change the supply and demand dynamics.
Some analysts estimate that the selling pressure from payments could push Bitcoin to $50,000 in the near term. The ongoing transfers from the German government have also weighed on the market.
However, others claim the amounts are a fraction of daily Bitcoin trading volumes. They say most creditors are long-term investors and are unlikely to dump their holdings en masse, limiting the impact.
However, analysts widely expect significant volatility between the Mt Gox dividend and the start of the German government’s sales in July.