Bitcoin price fell on Thursday as worries over token distributions by Mt Gox and capital outflows from major exchanges weighed on the market sentiment. Despite positive signals on U.S. inflation and interest rates, Bitcoin and crypto markets struggled to keep up with the broader risk-driven rally.
Bitcoin fell nearly 4% to $58,467.0 by 01:46 ET (05:46 GMT).
Mt Gox Fears Resurface After Test Transaction
Fears of selling pressure from token distributions by Mt Gox resurfaced this week after a wallet associated with the defunct exchange and holding $2 billion of Bitcoin conducted test transactions. Traders are concerned that this could lead to more selling pressure on the world’s biggest cryptocurrency, especially after Mt Gox began returning stolen Bitcoin to clients in July.
Mt Gox was previously reported to have mobilized about $9 billion of Bitcoin earlier this year.
USDT Outflows Signal Potential Price Weakness
According to digital assets research firm IntoTheBlock, approximately $1 billion of the stablecoin USDT was withdrawn from crypto exchanges this week. Historically, outsized USDT outflows have indicated price weakness in Bitcoin, suggesting that traders are moving money off exchanges in anticipation of a risk-off event.
Crypto Prices Dip as CPI Data Disappoints
Broader cryptocurrency prices declined on Thursday, underperforming other risk-driven assets due to concerns over Mt Gox distributions and exchange withdrawals. Despite softer-than-expected inflation data, crypto prices failed to rally, even as traditional markets like stocks surged on the possibility of lower interest rates.
Although Bitcoin still recorded a month-on-month increase, traders are predicting a smaller interest rate cut by the Federal Reserve in September, limiting the extent of the risk-on move. Ethereum fell 3.1% to $2,638.30, while other altcoins like XRP, Litecoin, and Dogecoin also saw declines.
In the meme token category, Shiba Inu fell 3.4%.
Analysis:
The recent drop in Bitcoin price can be attributed to concerns surrounding Mt Gox’s token distributions and capital outflows from exchanges. This has created selling pressure in the market, impacting not only Bitcoin but also other cryptocurrencies. Additionally, the withdrawal of USDT from exchanges signals potential weakness in Bitcoin prices. Traders are closely watching these developments and positioning themselves accordingly. The overall sentiment in the market is cautious, with investors awaiting further clarity on the impact of these factors on cryptocurrency prices.