Bitcoin Faces Worst Week In Over A Year Amid Liquidation Concerns

Bitcoin is poised for its largest weekly decline in more than a year, driven by fears of a significant sell-off from the now-defunct Japanese exchange Mt. Gox and continued liquidation by leveraged investors after the cryptocurrency’s recent surge.

The price of Bitcoin, the world’s largest cryptocurrency, plummeted by as much as 8% today, hitting $53,523, its lowest point since late February. This sets Bitcoin on track for a more than 12% weekly decline, the steepest drop since early November 2022.

Ethereum, Bitcoin’s main competitor, also faced a substantial decline, falling 9% to $2,841, marking its lowest value in over two months.

According to media reports, Mt. Gox, once the leading cryptocurrency exchange before its collapse a decade ago, may soon begin returning Bitcoin to creditors. These creditors, having held their Bitcoin since it was worth only hundreds of dollars in 2014, are expected to sell, increasing market pressure.

“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.”

Additional market anxiety has been fueled by speculation over potential changes in the US presidential race. Concerns are growing that Joe Biden might be replaced as the Democratic nominee by a candidate less favourable to cryptocurrency following a shaky debate performance against 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 the crypto platform Nexo.

Bitcoin had a strong start to the year, reaching a record high of $73,803.25 in mid-March following the launch of exchange-traded funds in the US. However, it has struggled to maintain that momentum.

“With an asset that has been range-bound 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.”

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