Cryptocurrencies plunged on Friday as investors focused on the payout of nearly $9 billion to users of collapsed bitcoin exchange Mt. Gox.
As of 10:50 a.m. London time, bitcoin’s price slumped nearly 6 percent in 24 hours to hit $54,500.53, marking the first time it’s traded below the $55,000 level since Feb. 27, according to data from CoinGecko.
Rival token ether sank around 9 percent to $2,872.10.
Altogether, the entire cryptocurrency market has shed more than $170 billion in combined market capitalization in the last 24 hours, according to CoinGecko data.
On Friday, the trustee for the Mt. Gox bankruptcy estate, Nobuaki Kobayashi, said in a statement that it had begun making repayments in bitcoin and bitcoin cash to some of the creditors through a number of designated crypto exchanges.
Mt. Gox’s trustee didn’t specify how much money had been transferred to these exchanges.
He noted that the remaining funds would be returned to creditors once a series of conditions is met, including confirming the validity of registered accounts and completing discussions between the trustee and the designated crypto exchanges.
The trustee is still working to ensure repayments “can be made safely and securely,” Kobayashi wrote, urging “eligible rehabilitation creditors to wait for a while.”
It comes after a small amount of bitcoin was moved out of wallets associated with Mt. Gox, according to blockchain analytics firm Arkham Intelligence, with the largest movement being a $24 transfer to the Japanese crypto exchange Bitbank.
Bitbank is among the recipients listed to support repayments.
Germany sells cryptocurrencies
Recently, the world’s largest cryptocurrency has been pressured by news of the collapsed bitcoin exchange Mt. Gox preparing the distribution of around $9 billion worth of coins to users. This dumping of coins onto the market is expected to lead to some significant selling action.
Also pressuring crypto markets, the German government on Thursday sold roughly 3,000 bitcoins — worth approximately $175 million as of today’s prices — from a 50,000-bitcoin pile seized in connection with the movie piracy operation Movie2k, according to Arkham Intelligence.
Arkham, which is tracking Germany’s bitcoin wallet, noted the government still holds more than 40,000 bitcoins worth over $2 billion.
Volatility in cryptocurrencies
The crypto market‘s volatility stems from a mix of factors, some common to most investments and some unique to the young age of cryptocurrency.
Cryptocurrencies are a relatively new asset class, still in a “price discovery” phase. This lack of historical data makes them more volatile compared to established assets like stocks or bonds.
Traditional markets have a larger pool of investors, leading to smoother price movements. Crypto markets, on the other hand, can be less liquid, meaning large buy or sell orders can have a more significant price impact.
Hype, fear, and uncertainty can cause dramatic price swings. Positive news or exciting developments can send prices soaring, while negative press or regulations can trigger sell-offs.
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