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Bitcoin (BTC) has dropped below $59,000, marking its first dip under this threshold since late April, amidst concerns over sell pressure from Mt. Gox repayments and potential miner sales. This decline has led to $230 million in liquidations, significantly impacting major tokens such as Solana (SOL) and Dogecoin (DOGE).
The market is apprehensive about the imminent distribution of assets by Mt. Gox, the defunct exchange that will start repaying clients in July 2024. These repayments will be made in BTC and Bitcoin Cash (BCH), potentially exerting additional selling pressure on both cryptocurrencies. BTC has already lost 3.3% in the past 24 hours, according to CoinGecko data, with the sell-off starting after the Tokyo equity markets opened. Major tokens such as Ether (ETH), SOL, and DOGE also suffered declines of up to 8%.
Futures trades betting on higher prices have experienced over $230 million in liquidations in the past 24 hours, according to CoinGlass. BTC and ETH futures alone saw over $60 million each in long liquidations, while futures tracking DOGE, SOL, XRP, and PEPE recorded at least $4 million in losses. Binance reported the highest liquidations among exchanges, with over $110 million.
Liquidations occur when an exchange forcefully closes a trader’s leveraged position due to insufficient margin. This process indicates that leverage is being purged from popular futures products, often serving as a short-term signal of decreasing price volatility.
Trading firm QCP Capital predicts a subdued market for the next quarter due to uncertainties surrounding the Mt. Gox bitcoin supply release. In a Thursday broadcast on Telegram, QCP Capital stated, “We anticipate a subdued Q3 for BTC as the market remains uncertain around the supply from the Mt. Gox release.”
Overall, the market remains wary of the potential influx of BTC and BCH from Mt. Gox repayments and how it will affect cryptocurrency prices in the coming months.
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