Over $678 million in cryptocurrency was liquidated within a 24-hour period as Bitcoin’s price plummeted below $54,000.
Bitcoin hit a four-month low on Friday following a significant $2.7 billion transfer by Japanese crypto exchange Mt. Gox to a new wallet. This move coincided with the exchange initiating repayments to creditors and heightened sales by leveraged traders seeking safety amidst market uncertainty.
The cryptocurrency dipped 5% to $53,806 before recovering slightly to around $54,658 as of 05:55 UTC. It has seen an overall decline of more than 11% over the past week and a staggering 22% drop in the last month.
Bitcoin’s sharp decline was triggered by news of Mt. Gox’s massive transfer, its largest since May, which followed smaller trial transactions earlier in the week. The exchange’s repayment efforts, starting with a total of $9 billion in Bitcoin owed to creditors, are expected to prompt significant sell-offs. Many of these creditors acquired their holdings at just a few hundred dollars per Bitcoin back in 2014.
Analysts are wary that such a substantial influx of Bitcoin into the market could lead to increased volatility and downward pressure on its value.
Bitcoin had surged earlier in the year, buoyed by the introduction of US exchange-traded funds, reaching a peak above $73,000 in mid-March. However, these gains have since been erased as the price has steadily declined.
In addition to Mt. Gox’s developments, crypto liquidations surged to a two-month high of $682.76 million in the last 24 hours, according to CoinGlass. This figure includes $589.54 million from long positions and $93.2 million from short positions, with long BTC positions contributing $185.08 million.
Concerns have also been raised over potential political impacts on cryptocurrency markets, with analysts noting apprehension following a lackluster debate performance by Democratic presidential nominee Joe Biden against rival Donald Trump. There are fears that a less crypto-friendly successor to Biden could emerge.
Alex Kuptsikevich, FxPro’s senior market analyst, anticipates further declines for Bitcoin, suggesting a drop to $51,500, a 12% decrease from current levels, as more likely than a similar increase to $65,800.
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