Bitcoin experienced a significant drop on Friday, reaching a four-month low as fears of an impending distribution by the defunct crypto exchange Mt. Gox intensified selling pressure.
Additionally, German authorities transferred approximately $75 million worth of cryptocurrency, confiscated from a piracy website, to exchanges, signaling a potential mass sale event reminiscent of earlier this year.
Bitcoin fell by 8.5% in the past 24 hours, landing at $54,092.3, its weakest level since March. The cryptocurrency also declined over 11% in the past seven days.
Mt. Gox Wallet Activity Sparks Anxiety
Wallets linked to the now-defunct Mt. Gox exchange were observed conducting test transactions, heightening concerns over an imminent distribution. In June, Mt. Gox’s liquidators announced plans to begin returning Bitcoin, stolen during a 2014 hack, to clients starting in early July. Many traders speculate that recipients of these tokens will likely sell them, given the exponential rise in Bitcoin’s value over the past decade.
This scenario has created immense selling pressure on Bitcoin, leading traders to offload the token and secure substantial profits accumulated throughout 2024. Additional sales by German authorities further exacerbated the situation.
Broader Crypto Market Impacted by Political and Economic Uncertainty
The wider cryptocurrency market mirrored Bitcoin’s sharp decline, influenced by uncertainty surrounding the U.S. presidential election and interest rate policies.
Speculation about President Joe Biden possibly withdrawing from the 2024 Democratic candidacy created unease in crypto markets. Concerns mounted that Biden might be replaced by a candidate with an even stricter stance on cryptocurrency.
Furthermore, traders were cautious ahead of a crucial U.S. nonfarm payrolls report, despite a weakening dollar amid rising expectations of an interest rate cut in September. Unlike usual trends, the crypto market lagged behind a rally in stocks.
Ether, the world’s second-largest cryptocurrency, dropped 10.5% to $2,902.42, erasing gains made in late May and hitting a near two-month low. Other major cryptocurrencies like XRP, SOL, and ADA fell between 7% and 17%, while meme tokens SHIB and DOGE each lost over 16%.
Low trading volumes due to the July 4 U.S. market holiday also contributed to the losses, reflecting a waning sentiment towards cryptocurrencies. The anticipation of a spot Bitcoin exchange-traded fund approval has also diminished, adding to the declining interest in the crypto market.
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