Bitcoin sank to a four-month low on Friday, breaking below technical supports as traders anticipated the dumping of long-lost tokens from a defunct Japanese exchange and further selling by momentum-spooked leveraged players.
The price of the world’s largest cryptocurrency slid more than 8% to US$53Â 523, below chart support around $55Â 000 and its lowest since late February.
It has lost some 12% for the week so far, even as many of the risk-sensitive assets it tends to track, such as the Nasdaq, have gained. Ether slid 9% to $2Â 841, an over two-month low.
Media reports said Mt Gox, the world’s leading exchange for cryptocurrencies before it collapsed a decade ago, may start returning bitcoin to creditors, who are seen as likely sellers since the token’s worth was only hundreds of dollars in 2014.
“The selling pressure is still related to creditor selling from the failed Mt Gox exchange,” Tony Sycamore, a market analyst at IG, said. “However, the acceleration to the downside suggests the market is trying to get ahead of the creditor flows.”
Analysts have also pointed to worries over the possibility of Joe Biden being replaced as the Democrats’ presidential nominee by someone less pro-crypto after a shaky debate performance with rival candidate Donald Trump.
Strong start
Bitcoin had a strong start to the year after the launch of exchange-traded funds in the US, propelling it to a record $73Â 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, which are forced to sell as prices fall.
“This of course creates a cascading effect, pushing prices further down than it might in a market with less leverage.” — Ankur Banerjee, Tom Westbrook and Sameer Manekar, (c) 2024 Reuters