Cryptocurrencies plummet with investors fearing eviction understand what is happening

The cryptocurrency market is going through a sudden downturn, with Bitcoin and Ethereum investors being hit the hardest. The total capitalization value of cryptocurrencies lost more than $50 billion (R$259 billion) in one hour due to several negative reports.

The bankruptcy of crypto bank Silvergate, the upcoming Consumer Price Index (CPI) and the possibility of large Bitcoin dumps from victims of the bankrupt exchange Mt. Gox generated insecurities and fears.

Financial experts believe that the upcoming CPI report could indicate an acceleration in inflation of up to 50 basis points (bps), which could negatively impact cryptocurrencies.

Further, Payments to Mt. Goodcould lead to a major drop in the price of Bitcoin as several people will receive a total of 142,000 bitcoins and be able to sell them next week.

Analysts also said the drop was also caused by a large spot sale on Binance, which created a ripple effect and liquidated positions of several traders.

News of the falling shares of crypto bank Silvergate also exacerbated sentiment in the cryptocurrency market.

The largest cryptocurrencies by market capitalization, such as Bitcoin, Ethereum, XRP, Cardano, Polygon, Solana, Shiba Inu, and Dogecoin, are all down as much as 10%.

After 8 years, victims of the Mt. Gox can start receiving lost bitcoins

Victims of the Mt.Gox exchange can finally receive their bitcoins after the hack that took place in 2014. According to a recent statement from the company, creditors will receive their bitcoins on March 10, 2023, i.e. this Friday.

Mt.Gox was one of the world’s first Bitcoin exchanges. Founded in 2010 by Jed McCaleb, the company has quickly grown to become the largest bitcoin trading platform in the market, holding approximately 80% of the global Bitcoin market in 2013.

However, in 2014, the platform suffered a major hack, resulting in the loss of approximately 850,000 bitcoins, which is equivalent to more than $20 billion USD at current exchange rates.

Most investors have given up hope of getting their bitcoins back, but they will now receive payments due to an agreement of lump sums and smaller payments, payments will be made over a period of about seven months, until September 30, 2023.

It is not clear how much bitcoin will be returned to creditors, but they are expected to receive about 21% of the total amount lost as amounts have been reassessed since the bankruptcy filing.

According to a 2019 document, Mt.Gox’s balance sheet is approximately 142,000 Bitcoins, 143,000 Bitcoin Cash, and 69 billion yen (2.6 billion reais).

The fears in the market are related to the possible dumping of the bitcoins in question, as victims of the hack have been waiting for nearly a decade to get some of their money back.

Despite this, strategists at UBS expect redemptions to be no cause for concern for the bitcoin price, as the bitcoin quantity accounts for 16% of daily trading volume.

“Due to the fact that most early adopters continue to believe in cryptocurrencies, it is unlikely that most will make it to the market,” they said.

Recent reports show that two of the exchange’s largest creditors, with 20% of credits, have opted to pay in crypto. While the amount can be deposited in the market, many other investors have chosen to receive in fiat currency.

Bloomberg strategist warns Bitcoin could fall further

Bitcoin could face a very bad outlook in 2023, according to Bloomberg Intelligence senior macro strategist Mike McGlone. He claimed in a recent report that if the Federal Reserve, the central bank of the United States, continues to raise interest rates to reduce inflation, it could put pressure on risky assets like cryptocurrencies.

McGlone warns that buy-and-hold investors may get some protection from the potential that the bear market is not over. It also suggests that cryptocurrencies and stocks could fall more than they did during the 2022 bear markets.

The strategist stated that Bitcoin needs to show sustained strength amid concerns that the lows of 2022 may not be the lows. He goes on to point out that $25,000 is an important price level for bitcoin and that March could quickly indicate whether it will remain resilient despite the Fed’s tightening monetary policy.

McGlone points out that the federal funds rate was zero a year ago and is still rising. He believes that markets seem to be underestimating long and variable monetary policy delays, which seems reason enough to be defensive.

The strategist’s angle is clear: Venture assets should show resilience in early March as the federal funds rate hit zero a year ago and is approaching 5%.

Liquidations

The recent drop in the price of Bitcoin and cryptocurrencies has led to an earthquake of liquidations. US$250 million (R$1.2 billion) worth of cryptocurrencies have been liquidated, according to CoinGlass data.

Bitcoin and Ethereum traders were the hardest hit, with $76 million and $40 million in liquidations, respectively.

According to CoinGlass data, more than 84 thousand traders have liquidated more than $251 million in the past 24 hours. The largest settlement order was for $4.16 million on broker OKX.

About $200 million in crypto futures contracts were also settled in just 4 hours, while about $185 million were settled in less than an hour.

Source: Live Coins

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