Bitcoin was set for its biggest weekly fall in nearly a year on Friday, as traders fretted over the likely dumping of tokens from defunct Japanese exchange Mt Gox and further selling by leveraged players after the cryptocurrency’s strong run.
The price of the world’s largest cryptocurrency slid as much as 8% on the day to US$53 523, its lowest since late February. It was last trading at $56 565, down more than 3% on the day.
It was on track for a more than 10% weekly decline, its biggest since August 2023.
Ether, the world’s second largest cryptocurrency, slid to as low as $2 822.30, a more than two-month low. It was last at $2 976.62, down 5.28%.
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,” 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.”
The move downward in bitcoin triggered the largest daily liquidations for crypto traders since the collapse of crypto exchange FTX in 2022, according to a research note from Wintermute, a crypto trading firm.
Fraying
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.
“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 crypto platform Nexo.
Bitcoin had a strong start to the year after the launch of exchange-traded funds in the US, 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.” — Hannah Lang, Ankur Banerjee, Tom Westbrook, Sameer Manekar and Iain Withers, (c) 2024 Reuters