Bitcoin cryptocurrency crashes massively
The manager of the insolvent cryptocurrency exchange Mt.Gox announces that creditors will receive their Bitcoin back. If many of them decide to sell their holdings, there could be an oversupply on the market. This concern is contributing to a price drop.
The price of Bitcoin has significantly decreased in value. On late Wednesday evening, the price of Bitcoin on the Bitstamp platform was still above the $60,000 US-Dollar mark, but then declined by around 5% within twelve hours. At noon, the price recovered slightly but remained below the $58,000 US-Dollar threshold. Analysts attributed the price drop primarily to a statement from the insolvency administrator of the failed cryptocurrency exchange Mt.Gox. He had announced that a large number of Bitcoin tokens (BTC) would be returned to affected creditors.
The affected parties have been waiting for a refund since 2014. Following the exchange's collapse in 2014, users collectively lost approximately 850,000 BTC. Of this amount, 142,000 BTC were recovered and are now to be returned to their rightful owners. The Tokyo marketplace was the largest global trading platform for the digital cryptocurrency in the early days of Bitcoin. In late February 2014, Mt.Gox filed for bankruptcy following a hack and plunged the currency into its first major crisis of trust.
Oversupply from Mt.Gox Creditors?
It is unclear how former Mt.Gox customers will behave now. If a significant number of them decide to sell the rescued Bitcoin holdings quickly, this would lead to an oversupply on the market. Market observers from Glassnode have not yet recorded any major BTC transfers.
The fear of an oversupply is also fueled by the fact that law enforcement agencies are sitting on large Bitcoin holdings that they have seized from criminals. For example, the Saxony Criminal Police Office seized around 50,000 Bitcoin in the context of investigations against the illegal film exchange Movie2k.to in January.
The overall mood on the crypto market is also related to the US Federal Reserve. It is currently unclear when and to what extent the Fed will ease its monetary policy. The calculation is: As long as interest rates remain relatively high, investors have many options to invest their money profitably. In this case, the crypto market suffers. If interest rates for traditional investments decrease, crypto investments become more attractive.
Despite the manager's announcement to return Bitcoin to Mt.Gox creditors, concerns of oversupply in Berlin's crypto market arise. With many creditors potentially selling their holdings, there might be a significant increase in supply, potentially influencing Bitcoin's market price.
Furthermore, the return of Bitcoin by Mt.Gox could escalate the issue of oversupply, given that this exchange was once a significant player in Berlin's early Bitcoin trading scene.
