Crypto
Massive Sell-Off: Mt. Gox Bitcoin Payout Fears Wipes Out $170 Billion From Crypto Market
The cryptocurrency market experienced a substantial downturn on Friday, compounding the selling pressure witnessed over the past two weeks. The leading cryptocurrency, Bitcoin (BTC), retraced over 20% from its highs in June and May, dropping as low as $53,500.
The market decline was largely attributed to the long-awaited trustee overseeing the Mt. Gox bankruptcy, who announced the commencement of Bitcoin and Bitcoin Cash repayments to creditors affected by the infamous hack that resulted in billions in losses.
As a result, the entire cryptocurrency market shed over $170 billion in combined market capitalization in just 24 hours.
Bitcoin Repayments And German Government Sell-Off
The trustee responsible for the Mt. Gox bankruptcy estate, Nobuaki Kobayashi, stated that Bitcoin and Bitcoin Cash repayments had begun through designated crypto exchanges.
While the amount transferred to these exchanges was not specified, data from market intelligence platform Arkham revealed that 47,229 BTC, valued at $2.71 billion, had been transferred to an unknown address.
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Kobayashi emphasized that the remaining funds would be returned to creditors once “specific conditions” were met, including verifying registered accounts and finalizing discussions with the designated exchanges.
The decline in crypto prices led to substantial liquidations in the derivatives markets, with over 229,755 traders experiencing combined liquidations worth $639.58 million in the past 24 hours. Of this amount, $540.46 million represented long trades, indicating positions taken by investors expecting long-term asset appreciation.
Additionally, the German government contributed to the market pressure by selling approximately 3,000 BTC, equivalent to around $175 million, from a seized stash of 50,000 BTC associated with the movie piracy operation Movie2k. Despite the sell-off, the government still holds over 40,000 BTC, valued at over $2 billion.
What Historical Price Cycles Suggest
Despite the ongoing bloodbath witnessed in crypto prices over the past month, industry insiders and analysts remain optimistic about Bitcoin’s future performance.
Despite the short-term selling pressure resulting from Mt. Gox repayments, experts anticipate a rebound towards the end of the year. Crypto data and research firm CCData suggested that Bitcoin’s current appreciation cycle has not yet peaked and will likely achieve a new all-time high.
Historical market cycles indicate that Bitcoin’s Halving event, which reduces the supply of new BTC, typically precedes a period of price expansion between 12 and 18 months. The most recent Halving occurred in April, suggesting potential further growth into 2025.
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Tom Lee, co-founder and head of research at Fundstrat Global Advisors, told CNBC that he predicts that Bitcoin will hit $150,000 despite the Mt. Gox overhang.
The launch of an Ethereum exchange-traded fund (ETF) in the US and the approval of the first US spot Bitcoin ETF earlier this year contribute to the overall positive sentiment in the market, indicating potential growth and further mainstream adoption of cryptocurrencies.
At the time of writing, BTC is trading at $55,680, reflecting a significant 21% drop in price over the past month. Bulls in the market are closely monitoring the $54,480 price level, representing substantial support for BTC. This level holds critical importance as it could prevent further price declines and the risk of breaking below the crucial $50,000 level.
Featured image from DALL-E, chart from TradingView.com
How Indiana’s redistricting could impact the legislative session
Statehouse reporter Kayla Dwyer breaks down tensions between Indiana and the Trump administration regarding the state’s redistricting efforts.
Indiana lawmakers are hoping to make the state a cryptocurrency leader by allowing the state to invest in digital currencies like Bitcoin for state savings and retirement plans while prohibiting local communities from restricting crypto companies.
The legislation, House Bill 1042, comes as excitement grows over the once obscure digital assets that have made millionaires and wiped-out fortunes. Its supporters now include some of the country’s most powerful people, including President Donald Trump and initially hesitant financial institutions, while the first major piece of crypto legislation passed Congress earlier this year.
Now, Indiana is looking for a slice of the windfall. The topic was one of just a few to get an earlier-than-usual hearing as lawmakers consider redistricting, signaling it’s a major topic of interest among Republicans.
“Crypto policy will become a mainstay of this committee’s work for probably years to come,” said bill author Kyle Pierce, R-Anderson, at a House Financial Institutions Committee meeting Dec. 4.
A volatile investment?
Though the bill would allow public investment funds to delve into the world of digital currency, it stops short of allowing direct crypto investments.
Instead, the bill applies to cryptocurrency exchange traded funds, or EFTs — a safer, federally regulated fund that tracks crypto prices, either by holding the digital assets or a contract that speculates on prices in the future.
The state investment programs required to provide such options include the 529 education savings plan and certain retirement funds for teachers, public employees and lawmakers. It also allows other state investment funds to place their assets in crypto EFTs.
While less volatile than a direct investment, it’s not entirely without risk. Because there is less oversight in the underlying crypto market, the Securities and Exchange Commission has warned it’s difficult to prevent fraud and ensure fairness, even for EFT investors.
That was a tentative concern for Tony Green, deputy executive director of the Indiana Public Retirement System, at the House Financial Institutions Committee hearing Dec. 4.
Though neutral on the bill, Green said IPRS would want to ensure there were proper disclaimers about volatility. And while the agency wants to offer choices to their members, he said, those surveyed were generally uninterested.
No anti-crypto regulations
Another aspect of the bill limits how local governments and state agencies can regulate crypto, though Pierce said it’s only intended to ensure laws don’t unfairly target crypto.
Specifically, it would prohibit regulation of an individual or a business’ ability to accept digital currency as payment, including by taxing use of the payment method. It also stops local governments from denying crypto mining facilities in areas zoned for industrial use or applying noise restrictions specific to crypto.
There was some worry about a clause in the bill that bans a public agency from prohibiting a person’s ability to “use or accept digital assets as a method of payment for legal goods and services.”
The bill was welcomed by the founder of the local crypto mining business Megawatt.
Ilya Rekhter, who operates mining facilities in rural areas across the state, said the legislation would help prevent a sudden change in zoning laws after a business has already invested money in a facility, Rekhter said.
“We’re not asking for any special treatment,” he said, “just the same treatment.”
The committee won’t hold a vote on the bill until January.
Contact breaking politics reporter Marissa Meador at mmeador@gannett.com or follow her on X @marissa_meador.
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