Bitcoin was on track for its largest weekly decline in more than a year on Friday, as traders worried about the potential dumping of tokens from the defunct Japanese exchange Mt. Gox and further selling by leveraged players following the cryptocurrency’s strong run. The price of Bitcoin, the world’s largest cryptocurrency, fell by as much as 8% in a single day to $53,523, its lowest since late February.
The cryptocurrency was heading for a weekly decline of more than 12%, its largest since early November 2022. Rival token Ether also dropped, sliding 9% to $2,841, reaching a more than two-month low.
Media reports suggested that Mt. Gox, once the world’s leading exchange for cryptocurrencies before collapsing a decade ago, might start returning Bitcoin to creditors. These creditors are seen as likely sellers since the token’s value was only in the hundreds of dollars back in 2014.
“The selling pressure is still related to 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.”
Analysts have also noted concerns over the possibility of Joe Biden being replaced as the Democratic presidential nominee by someone less pro-crypto following a shaky debate performance against rival candidate Donald Trump.
“What’s striking about this slide in Bitcoin is it comes as U.S. 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 U.S., propelling it to a record $73,803.25 in mid-March. However, it has since struggled.
“With an asset that has been rangebound for quite 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.”