The Spot ETH ETF launch is nearing completion with significant volume, expected to surpass the daily $1 billion mark. However, BTC remains below $66,000 and ETH fails to hold $3,500. Why are BTC and altcoins dropping? What caused the decline in cryptocurrencies this time? Here are the details.
Why Did Cryptocurrencies Drop?
Of course, all cryptocurrencies turned red due to BTC losing over $1,400 in just two hours. Today’s drop is again due to concerns about excess BTC supply. MTGOX announced it would return over 140,000 BTC to creditors starting this month.
According to creditor posts on Reddit, X, and Telegram, refunds are being processed through the Kraken exchange. Additionally, MTGOX moved another 47,500 BTC to different addresses today. Creditors holding billions of dollars face a tempting selling opportunity with over 200 times profit at the current price.
Investors, fearing that those receiving refunds would quickly sell, acted early to reduce their risks, leading to a BTC drop. Moreover, this is not the only issue. The US government moved $4 million worth of BTC to Coinbase Prime, signaling a potential new sale. The US holds billions of dollars worth of BTC seized in various incidents.
According to Arkham data, MTGOX still holds 85,234 BTC. Most refunds are expected to be completed within the next two weeks. The extent of users not meeting the conditions remains a curiosity.
Large Bitcoin Short Fund
CSOP Asset Management, one of China’s largest asset managers, wants to launch a new ETF for those wishing to short BTC. This could lead to more capital flowing into short products, causing investors to panic and sell. This was one of the reasons for the drop.
What Happens Now?
MTGOX refunds were bound to happen someday, and after multiple delays, they began during a highly anticipated bullish period for crypto. Looking at the bright side, we don’t see massive drops in price while the rise is being suppressed. In the medium to long term, the resolution of such a significant issue should be viewed positively for the markets.
Once the refunds are completed, one of crypto’s biggest issues will be resolved, and as seen in the BTC ETF example, we will likely see a delayed rally period with pre-established conditions for a rise. Or maybe we won’t; crypto is always full of surprises.
