Bitcoin Set for Biggest Weekly Fall in Over a Year as Mt. Gox Return Woes Resurface

Bitcoin was set for its biggest weekly fall in more than a year today, as traders fretted over the likely dumping of tokens from defunct Japanese exchange Mt. Gox and further selling by leveraged players after the cryptocurrency's strong run.

Bitcoin price set for biggest weekly drop in over a year on Mt. Gox, leverage worries

Bitcoin was set for its biggest weekly decline in more than a year on Friday, as traders braced for a likely dumping of tokens from defunct Japanese exchange Mt. Gox and anticipated further selling by leveraged traders after a strong run by the cryptocurrency.

The world's largest cryptocurrency fell as much as 8 per cent during the day to $53,523, its lowest since late February.

It was set for a weekly decline of more than 12 per cent, which would be its biggest since early November 2022.

Second-largest cryptocurrency Ether fell 9 per cent to $2,841, to a more than two-month low.

Mt. Gox, once the world's leading exchange for cryptocurrencies before it collapsed about a decade ago, is set to start returning bitcoin to creditors, who are widely expected to sell the tokens since the cryptocurrency was worth only a few hundred dollars in 2014, according to media reports and court filings.

“The selling pressure is still largely to do with creditor selling from the failed Mt Gox exchange,” said Tony Sycamore, a market analyst at IG.

“However, the acceleration to the downside suggests the market is trying to get ahead of the creditor flows.”

Some analysts also pointed to concerns over the possibility of Joe Biden being replaced as the Democrats' presidential nominee by someone less pro-crypto after a shaky debate performance with rival candidate Donald Trump.

“What's striking about this slide in Bitcoin is it comes as US stocks and global equity indexes rest at or near record highs — the correlation between Bitcoin and mainstream equities is fraying,” said Antoni Trenchev, co-founder of crypto platform Nexo.

Bitcoin had a strong start to the year after the launch of exchange-traded funds in the United States, which helped propel it to a record high of $73,803.25 in mid-March. However, it has struggled since.

“In an asset that has been rangebound for a while and recently in the lower end of that range, there are plenty of margined positions,” said Justin D’Anethan at digital assets market maker Keyrock.

“This of course creates a cascading effect, pushing prices further down than it might in a market with less leverage.”