Why is Crypto Down Today? Bitcoin Price Dips as Mt. Gox Repayments Begin & Ether ETFs

TLDR

Bitcoin price dropped over $1,400 within two hours on July 24, 2024
Mt. Gox has begun repaying creditors with over 140,000 BTC
Hong Kong launched Asia’s first Bitcoin futures inverse ETF
Over $150 million in leveraged long positions were liquidated
Ether ETFs started trading, potentially bringing new institutional investors to crypto

The crypto market slide over the past 24 hours, with Bitcoin’s price dropping over $1,400 within two hours.

This decline pushed Bitcoin’s 24-hour losses to 2.1%, bringing its price to around $65,891. Several factors contributed to this market movement, including the start of Mt. Gox’s creditor repayments, even the launch of Ether ETFs couldn’t push prices up.

Mt. Gox, a defunct cryptocurrency exchange that went bankrupt in 2014, has begun repaying its creditors with over 140,000 Bitcoin, worth approximately $8.5 billion.

On July 23, the exchange moved more than 47,500 Bitcoin, valued at nearly $3.2 billion, to two unknown addresses. According to a Telegram group of Mt. Gox creditors, some began receiving Bitcoin and Bitcoin Cash repayments on the Kraken crypto exchange on July 23.

The repayment process has been long-awaited, with creditors waiting for over a decade. During this time, Bitcoin’s price has surged by more than 10,000%. The fear of this additional Bitcoin supply entering circulation and potentially being sold off has put downward pressure on the market.

Adding to the market dynamics, Hong Kong launched Asia’s first Bitcoin futures inverse product on July 23. The CSOP Bitcoin Future Daily (-1x) Inverse Product aims to offer investors a method of profiting from declines in Bitcoin’s price. This new tool for betting against Bitcoin could potentially increase selling activity and exert overhead pressure on its price.

The crypto market also witnessed significant liquidations of long positions. Over $159 million in long positions were liquidated in the 24 hours leading up to July 24, compared to $40 million in short liquidations. For Bitcoin specifically, more than $24 million in long positions were liquidated against $13.93 million in short liquidations. These forced sales of assets to exit long positions increased selling pressure in an already bearish market.

On the same day, Ether ETFs began trading, potentially bringing new institutional investors into the cryptocurrency market. While analysts expect adoption to be slower compared to Bitcoin ETFs, this development introduces fresh dynamics to the market and could lead to increased volatility for Ether in the short term.

The current market situation is further complicated by political factors.

The decision by President Biden to drop out of the presidential race has introduced uncertainty into the market. Investors are waiting for more information about Vice President Kamala Harris’s stance on crypto and her potential impact on the race.

Despite the current downturn, several potential catalysts could support the crypto market in the coming months. The recent Bitcoin halving in April and the approval of Bitcoin ETFs earlier this year have already had positive impacts.

The upcoming U.S. presidential election in November, with pro-crypto candidate Trump currently favored to win, could be another positive catalyst for crypto.