Did Mt. Gox Cause Today’s Bitcoin Selling?

Bitcoin’s price dropped below the critical $60,000 mark on July 3, sparking concerns about an extended period of price consolidation. This decline coincided with speculation that the now-defunct Mt. Gox exchange might have begun distributing $9 billion worth of Bitcoin to its creditors.

In the 24 hours leading up to 10:33 am UTC on July 3, Bitcoin fell by 4.2%, reaching a local low of $59,600. On a weekly basis, the cryptocurrency is down 1.8%, as reported by CoinMarketCap. The price trend has been bearish since June, with Bitcoin experiencing nearly an 18% decline in the second quarter of 2024.

Investors have been eagerly waiting for Bitcoin to break above the $70,000 level to signal potential new all-time highs. However, falling below the $60,000 support could indicate a prolonged correction phase. The current price drop is partly attributed to the anticipated release of funds from Mt. Gox, expected to start in early July.

According to a Bitcoin transfer volume chart shared by Charles Edwards, founder of Capriole Investments, a significant amount of Bitcoin last moved between seven to ten years ago has now been transferred. Edwards noted in a July 2 post on X (formerly Twitter): “The entire history of this chart has disappeared because an enormous sum of Bitcoin moved on-chain, 10X more than the previous highs. $9B. But by who? Mt. Gox. It looks like those distributions really are coming.”

Mt. Gox owes over $9.4 billion in Bitcoin to approximately 127,000 creditors, many of whom have been waiting for over a decade to reclaim their funds. This influx of Bitcoin into the market could lead many investors to cash out, potentially exacerbating the price decline.

However, the impact of these distributions might be mitigated by institutional inflows into U.S.-based spot Bitcoin exchange-traded funds (ETFs). According to data from Dune, these ETFs have accumulated over $52.5 billion worth of Bitcoin since their launch in January.

Another factor contributing to Bitcoin’s price drop was the sale by a large Bitcoin holder, or whale. An unknown entity sold $180 million worth of Bitcoin within three minutes, a substantial amount to be liquidated in such a short timeframe. This sale was highlighted by industry watcher Zaheer in a July 3 post on X.

Additionally, Lookonchain reported that another whale transferred 1,723 BTC, worth over $168 million, to Binance within the past 24 hours. This transfer suggests that the entity might be preparing to sell and lock in profits, adding further selling pressure to the market.