Bitcoin Plummets to 4-Month Low Amid Mt Gox, Political Turmoil

Bitcoin’s price took a nosedive on Friday, sinking to a four-month low as concerns over the impending distribution of stolen Bitcoin by the defunct crypto exchange Mt Gox intensified. The situation was further compounded by reports of German police moving $75 million of confiscated crypto onto exchanges, sparking fears of a massive sell-off.

The world’s leading cryptocurrency plummeted 8.5% in the past 24 hours, landing at $54,092.3—its weakest level since March. This latest decline adds to a week-long slide, with Bitcoin now down over 11%.

Traders were spooked by test transactions from wallets associated with Mt Gox, signaling an imminent distribution of the stolen Bitcoin. With the token’s price skyrocketing in the past decade, many believe recipients of the recovered Bitcoin will likely sell, creating a significant supply glut.

Adding fuel to the fire, German police’s actions further fueled fears of a mass sell-off. The cryptocurrency market, already grappling with the Mt Gox situation, reacted negatively to this news.

Uncertainty over the U.S. presidential election and interest rates also cast a shadow over the crypto market. Speculation that President Joe Biden might withdraw from the 2024 race, potentially replaced by a more crypto-averse candidate, further added to the unease.

Despite the weakening dollar, which usually supports Bitcoin, the cryptocurrency remained under pressure due to the looming nonfarm payrolls report. Investors are closely watching this data for clues about the Federal Reserve’s interest rate policy.

The broader cryptocurrency market mirrored Bitcoin’s decline. Ether, the second-largest token, plunged 10.5% to a near two-month low, wiping out all gains made in late May. Other major altcoins like XRP, SOL, and ADA also suffered significant losses, while meme tokens like SHIB and DOGE experienced even steeper declines.

The losses were partly attributed to low trading volumes due to the July 4th U.S. market holiday. However, they also reflected a broader shift in sentiment as the initial excitement surrounding the potential approval of a spot Bitcoin exchange-traded fund dwindled.