The price of bitcoin is at its lowest level in months as bankrupt cryptocurrency exchange Mt. Gox begins the process of repaying creditors.
At one point Friday, bitcoin had fallen by about 6% but had since pared back some of those losses and was trading at $55,680 in the morning. The last time that the flagship cryptocurrency was that low was in February.
The downshift comes as Mt. Gox, which went bankrupt in 2014, begins staggered repayments in bitcoin and bitcoin cash tokens. The creditors will receive some $7.6 billion worth of bitcoin, according to Forbes. About $2.71 billion worth of bitcoin was moved to a new wallet Thursday night, driving concern that the creditors might try to liquidate some of the returned assets, driving down prices.
At one point, the total cryptocurrency market had lost some $170 billion in market capitalization in a 24-hour period, according to CoinGecko.
Bitcoin reached its all-time high in March when it punched in at over $73,700. However, bitcoin has fallen more than 21% in the last month and more than 11% in the past week alone.
Still, it is worth noting that bitcoin’s price is up 26% since the start of 2024 and a whopping 83% over the past 12 months — great returns for investors.
This year was historic for the cryptocurrency world because a bitcoin “halving” event occurred, which only happens every four years.
Halving is part of bitcoin’s complicated design. To “mine” for bitcoin, high-powered computers are used to verify virtual coin transactions. Bitcoin operates on what is known as a blockchain, essentially a public ledger, that contains the history of every transaction. The miners’ computers solve complicated math problems to add new blocks to the chain and are, in turn, rewarded with the digital token, making the endeavor profitable.
But about every four years, the block rewards for bitcoin miners get slashed in half, reducing the supply of new bitcoins by 50%. That makes the product a scarcer commodity and tends to raise its price in the following months.
The last halving occurred in May 2020. At the time, the cryptocurrency was priced at about $9,500. By the end of 2020, the price had risen to over $32,000, marking enormous 236% returns.
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Bitcoin has also gotten far more institutional exposure in recent months.
The Securities and Exchange Commission’s decision in January to allow bitcoin exchange-traded funds in the market was groundbreaking for the industry. Some experts and investors saw the decision as a watershed moment for the crypto market and only see the nascent space as growing from here.
