Bitcoin experienced a significant slump, reaching a five-month low under $55,000, following the announcement from the defunct cryptocurrency exchange Mt. Gox that it had commenced repayments to creditors. The news sent ripples through the market, triggering one of the largest liquidation events of the year.
Mt. Gox Begins Repayment Process
On July 5, Mt. Gox's Rehabilitation Trustee confirmed that repayments to creditors had begun, marking a significant milestone in the aftermath of one of the most notorious hacks in cryptocurrency history. The repayments are being processed through designated crypto exchanges in accordance with the rehabilitation plan.
Eligible creditors will receive their repayments promptly, provided they meet specific conditions such as confirming the validity of registered accounts and completing discussions with the trustee. This development follows the transfer of a substantial amount of Bitcoin by Mt. Gox in several transactions, including a notable movement of 47,228.7 BTC, valued at $2.71 billion.
According to data from Arkham Intelligence, these assets were subsequently transferred in several transactions, with 1,545 BTC, worth $85 million, moving to a wallet connected to the Bitbank exchange.
Market Reaction: Bitcoin Slumps
The news of Mt. Gox's repayments had an immediate and dramatic impact on the cryptocurrency market. Bitcoin's price fell by more than 7.2%, dropping to $54,209, its lowest level since February 2024. This decline triggered significant liquidations across the market. According to Coinglass, crypto traders lost over $675 million in the past 24 hours, with long traders, who had bet on a price increase, losing approximately $578 million, and short traders losing $98 million.
Bitcoin traders faced the highest losses, with over $225 million liquidated in the past day. Ethereum traders saw liquidations totaling around $167 million. Bitcoin Cash, another digital asset involved in the Mt. Gox repayment, also experienced significant losses, with approximately $3.8 million in liquidations.
Wider Cryptocurrency Market Impact
The sell-off was not confined to Bitcoin. Other cryptocurrencies also experienced substantial declines. Ether, for instance, dropped below $2,900, a decline of more than 9%. Binance's BNB and Solana were down 11% and 5.8%, respectively. Bitcoin Cash, which is also being used to repay Mt. Gox creditors, saw its value sink nearly 25% in the past week.
Background and Historical Context
Mt. Gox, once the world's largest cryptocurrency exchange, went bankrupt in 2014 after a massive hack that resulted in the loss of 850,000 Bitcoins, valued at over $57 billion today. Following the hack, Mt. Gox filed for bankruptcy and initiated rehabilitation proceedings in 2018 to compensate creditors. The current repayment process involves around 140,000 Bitcoins, worth approximately $7.6 billion, and 143,000 Bitcoin Cash tokens, valued at $42.5 million.
The anticipation of these repayments has raised concerns among market participants that creditors might move to liquidate a portion of their returned assets, potentially driving down prices further.
