Key points:

  • The price of Bitcoin fell to a 4-month low: $53,523, below the $55,000 support.
  • Bitcoin has lost 21% from its record high of $73,803.25 in March.
  • Investors fear a dump of bitcoins from the Mt. Gox: creditors of the exchange, which went bankrupt in 2014, may sell off cryptocurrency.

Bitcoin broke through a key support level on Friday, falling to its lowest level in four months. The decline was triggered by investor concerns related to two factors. First, there is the possible dumping of a significant amount of bitcoins long lost on the now defunct Japanese exchange Mt. Gox. Second, panic selling by leveraged traders driven by negative market sentiment.

The fall of the first cryptocurrency

The price of Bitcoin, the world’s largest cryptocurrency, fell sharply, falling more than 8% to $53,523. That’s below chart support around $55,000 and its lowest level since late February. Bitcoin has lost about 12% over the past week, countering the overall rise in risk assets such as the Nasdaq index.

The decline accelerated after the first debate between US presidential candidates, where Joe Biden threatened to be replaced as a candidate.

Bitcoin has seen gains since the start of the year, rising to a record high of $73,803.25 in mid-March after the launch of exchange-traded funds in the US, attracting investment. However, the rally has since fizzled out and Bitcoin has lost more than 21% of its value. Ether fell 9% to $2,841, also a more than two-month low.

The Mt. Gox factor and political events

Analysts see another factor that could put pressure on Bitcoin: payments to creditors of the bankrupt Mt. Gox. There is a possibility that after receiving cryptocurrency, lenders will sell it to lock in profits. Mt. Gox, which ceased operations in 2014, holds a significant amount of bitcoin that could be brought to market.

In addition, recent debates between US presidential candidates have caused political uncertainty, which also negatively affects risk assets, which include Bitcoin.

Let us recall that at the beginning of the year, Bitcoin showed growth, rising to a record level in March amid the launch of exchange-traded funds in the United States. However, since then the cryptocurrency has lost more than 21% of its value.