Cryptocurrency markets got rattled earlier this week after the price of bitcoin fell to a four-month low, partly because of problems tied to a crypto company. The events led to new worries about bitcoin investments that have been heading in the wrong direction of late.
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As Fortune reported on Monday, one reason for the bitcoin selloff has to do with repayments made by Mt. Gox, a Tokyo-based crypto exchange that went bankrupt a decade ago after being hacked. Mt. Gox recently started returning about $8-$9 billion in bitcoin to creditors.
As of Monday, it had been verified that 47,228 bitcoins from a Mt. Gox-associated wallet have moved to a new address likely designated for repayments, Matteo Greco, a research analyst at investment firm Fineqia International, told Forbes.
Although investors might be required to wait up to three months to access the funds, news of the repayments still “spooked the market and triggered current holders to begin selling,” Fortune reported.
The price of bitcoin fell nearly 12% intraday on Monday before closing at around $55,500. The price rebounded to near $58,000 on Tuesday, but it’s still well off its 2024 peak of about $73,225, set in early March.
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Before the recent selloff, bitcoin had been enjoying a strong rebound in 2024 after dipping below $26,000 as recently as September 2023. As Forbes India noted, bitcoin has been in a “weeks-long decline” that has seen it lose about one-fifth of its value.
Part of the problem has to do with broader trends, such as waning interest in crypto ETFs and economic uncertainty. But much of it has to do with Mt. Gox.
“As the [Mt. Gox] exchange prepares to compensate creditors with recovered bitcoins, fears of a major sell-off are swirling,” Shashank Bhardwaj, founder of yMedia, wrote in a column for Forbes India. “Market observers worry that a sudden influx of bitcoins could overwhelm demand, driving prices further down.”
Compounding the problem is the fact that the German government recently liquidated seized bitcoins and has been “offloading bitcoins on major exchanges like…
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