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Crypto Market Flushes $640 million as Mt Gox and Germany Prepare to Dump $11B Bitcoin Stash

Last Updated July 5, 2024 2:20 PM
Giuseppe Ciccomascolo
Last Updated July 5, 2024 2:20 PM
Key Takeaways
  • The crypto market was caught in a whirlpool of liquidations.
  • Mt. Gox exchange repaying creditors likely stirred the pot.
  • German authorities transferring heaps of bitcoins also played a role.

Apprehensions are high in July as the market prepares for the impending impact of Mt. Gox repayments and the German government’s sale of Bitcoin. With an $11 billion earthquake looming, Thursday saw the first tremors hit, wiping out millions and sending shockwaves through the market. 

Liquidations Top $640 Million

The cryptocurrency market experienced  over $640 million in liquidations over the past 24 hours as Bitcoin faced heavy selling pressure. In the last 24 hours, Bitcoin (BTC) fell by 7.4%. The decline followed Mt. Gox’s transfer of about $2.7 billion worth of Bitcoin in preparation for creditor payouts, which are set to begin early this month. It is also partly due to concerns about the German government selling its $3 billion stash of Bitcoins.

Data from Coinglass  showed that 231.667 traders were liquidated out of their positions, with total liquidations across centralized exchanges reaching $643.1 million. Bitcoin held the lion’s share, flushing nearly $222 million liquidated, including $182 million in long positions.

Ethereum also faced considerable turbulence, dropping 11% to $2,890 and draining $163.4 million, of which $143.3 million were long positions.

Mt Gox Started Reimbursements

Defunct cryptocurrency exchange Mt. Gox has begun repaying its debts in Bitcoin and Bitcoin Cash. As the Rehabilitation Plan provides, refunds to certain creditors will occur through some cryptocurrency exchanges in the upcoming weeks.

According to a post from the MtGoxBalanceBot account, the trustee’s wallet holds 94,457 Bitcoin.

Remaining creditors will receive their refunds once specific conditions are met, including account validation and acceptance of the Agency Receipt Agreement.

The Rehabilitation Trustee and exchanges are coordinating to ensure the refund process is safe and secure. Reddit posts confirm BTC and BCH have started being credited to exchanges. One user shared details from an email received from Mt. Gox.

Mt. Gox, founded in 2010 by Jed McCaleb and sold to Mark Karpelès in 2011, once handled 70% of global BTC transactions. In early 2014, it suspended all BTC withdrawals due to technical issues, later revealing that hackers stole 850,000 BTC. After filing for bankruptcy in 2014, the case moved into civil rehabilitation in 2018. Karpelès was convicted in 2019 of falsifying financial documents.

Germany Prepares To Disinvest

Germany has transferred over 3,000 Bitcoins, worth more than $172 million, from its official wallet. This is a move that has garnered attention in the cryptocurrency community. The transfer, disclosed by PeckShieldAlert on July 4, marks a strategic shift in how Germany manages its digital assets.

Initially, 1,300 Bitcoins from Germany’s Federal Criminal Police Office wallet moved toward major exchanges like Coinbase, Kraken, and Bitstamp. Further analysis revealed another 1,700 Bitcoins moved to a different address, totaling 3,000 Bitcoins. The remaining 1,700 Bitcoins went to another wallet, signaling diversified asset management.

Such large-scale transfers raise concerns about potential impacts on Bitcoin’s market price, similar to actions by other governments like the United States. Governments often confiscate digital assets tied to illegal activities and manage their disposal strategies. Joana Cotar, a German parliament member, criticized selling seized Bitcoins. She fears increased market volatility and long-term damage to the cryptocurrency market.

She advocates treating Bitcoin as a strategic national asset. This especially since the seized assets were from the illegal site Movie2k.to, totaling around 50,000 Bitcoins. Cotar invites key German officials to an upcoming event in October to discuss Bitcoin’s role in national strategies. She emphasized its potential for diversification, inflation hedging, and fostering innovation.

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