There was massive pandemonium in the crypto market on July 5th as investors anticipated the payout of nearly $9 billion to users of the collapsed Bitcoin exchange Mt. Gox. In this article, we will explore the recent decline in crypto market cap and its leading cause.
Crypto Market Cap Declines Massively
After previous calls of massive decline from the crypto market, with Bitcoin dropping to $57k, it took a new hit, causing the price of Bitcoin to drop to as much as $53k. According to data from CoinGecko, the decline to $53,523 was below chart support of $55,000. Moreover, this was the lowest price Bitcoin has recorded in the last four months, which was February 2024.
Bitcoin wasn’t the only crypto that took the hit as Ethereum, BNB, Solana, Cardano, and many other cryptocurrencies were affected. Subsequently, this affected the crypto market, suffering a downturn of more than 20% to as low as $1.98 trillion before a slight recovery to $2.07 trillion. The contributions to these were that Bitcoin market cap suffered a 20% decline, Ethereum’s 22%, while the broader crypto market’s valuation took a hit of over 29%. But there’s a reason behind this decline, as outlined below.
Why did the Crypto Market Decline?
Image from Arkham Intelligence
According to analysis, crypto traders were reacting to the dumping of long-lost tokens from Mt. Gox, a defunct Japanese crypto exchange. The Japanese media indicated that the crypto exchange was planning to return Bitcoin to creditors. Moreover, they were also planning to “spook” selling from leveraged players. Apparently, Mt. Gox collapsed in 2014, but the selling of the tokens involved with the collapse didn’t happen immediately due to legal issues.
More details from Arkham Intelligence show that in the past 17 hours, Mt. Gox wallets moved 47,229 BTC ($2.71B) from the cold wallet 1HeHL. Furthermore, 2701.8 BTC ($148.4M) was moved out of Mt. Gox wallets, with 1544.7 BTC ($84.9M) sent to Bitbank through Gox address 1PKGG. Their report also showed that around 1157.1 BTC ($63.6M) were moved to an unknown counterparty bc1qkjc. However, they predict that it is likely a listed repayment exchange.
Image from Arkham Intelligence
After all these movements, Arkham says that Mt. Gox, address 16ArP, continues to hold 44,527 BTC. However, the total amount of Bitcoin in their possession is said to be 138,985 BTC ($7.52B). Arkham Intelligence’s verdict is that the transfer confirms the repayment plans as announced by the Mt. Gox Trustee, Nobuaki Kobayashi.
Conclusion
Bitcoin’s price fell under $54,000 for the first time since February, and it was not the only crypto that was affected by this. Apparently, Ethereum’s market cap suffered a massive decrease of more than 22%, while the broader crypto market cap took a hit of over 29%. According to confirmed reports from Arkham Intelligence, the primary cause of the recent downturn was the anticipated sell-off from Mt. Gox. The crypto exchange had collapsed in 2014 and was trying to repay creditors. Only time will tell if July will become bullish again for the crypto market.
Cover Image from Microsoft Designer
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