The cryptocurrency market has been rocked by news from the now-defunct Bitcoin exchange MtGox, which has begun disbursing nearly $9 billion in compensation to its users.
As of the latest update from CoinGecko, Bitcoin has fallen nearly 6% in the past 24 hours, dropping below the $55,000 mark for the first time since February 27, settling at $54,500.
One of the primary theories for the current crash in the cryptocurrency market is the announcement by the long-defunct exchange MtGox regarding the commencement of compensations to its users. MtGox, which abruptly ceased operations in 2014, leaving many investors in limbo, has started the process of repaying users their lost assets.
The total amount of compensation is estimated to be between 650,000 to 950,000 BTC. At the peak price of $182 per BTC back in 2013, these assets were valued at approximately $118 million to $172 million. However, at today’s prices, this sum has ballooned to around $54 billion.
Given the enormous gains of over 30,000%, it’s highly likely that many users will opt to sell their once-forgotten cryptocurrency. The compensation will be distributed over the next three months, which could potentially exert significant downward pressure on the market.
German Government’s Bitcoin Sale
Adding to the market pressure, the German government sold approximately 3,000 Bitcoins worth around $175 million linked to the Movie2k film piracy case on Thursday. Despite this sale, Germany still holds over 40,000 Bitcoins, valued at more than $2 billion, underscoring its significant holdings in the cryptocurrency market.
As investors and traders digest the implications of this massive influx of BTC, the market is expected to remain volatile.
