Bitcoin‘s price experienced a notable decline on Thursday, primarily driven by resurfaced worries over token distributions from the defunct crypto exchange Mt. Gox and significant capital outflows from major cryptocurrency exchanges, which have heightened risk aversion in the market.
Bitcoin dropped nearly 4% to $58,467.00 as of 01:46 ET (05:46 GMT), overshadowing positive indicators related to U.S. inflation and interest rates. This decline was compounded by a lag in the cryptocurrency market’s performance compared to broader risk-driven assets.
Renewed Mt. Gox Distribution Fears
Concerns surrounding Mt. Gox resurfaced this week after a wallet linked to the exchange, holding $2 billion worth of Bitcoin, conducted test transactions. This activity has fueled speculation that a new round of token distributions could be imminent. Mt. Gox, which began returning Bitcoin stolen during a 2014 hack to clients in July, previously mobilized approximately $9 billion worth of Bitcoin earlier this year. Uncertainty about the scale of future distributions has heightened apprehensions about additional selling pressure on Bitcoin.
USDT Outflows Signal Potential Price Weakness
According to digital assets research firm IntoTheBlock, about $1 billion worth of the stablecoin USDT was withdrawn from cryptocurrency exchanges this week. Historically, substantial USDT outflows have preceded Bitcoin price declines, suggesting that traders may be pulling funds off exchanges in anticipation of a risk-off scenario.
Broader Cryptocurrency Market Decline
The broader cryptocurrency market mirrored Bitcoin’s downturn on Thursday, lagging behind the rally in other risk-driven assets. Despite softer-than-expected consumer price index (CPI) inflation data, which buoyed broader markets, including stocks, cryptocurrency prices remained subdued. The CPI data indicated a month-on-month increase, leading traders to anticipate a smaller interest rate cut by the Federal Reserve in September, thus tempering the overall risk-on sentiment.
Ethereum (ETH), the second-largest cryptocurrency, fell 3.1% to $2,638.30. Similarly, Solana (SOL), Ripple (XRP), and Cardano (ADA) each declined by over 1%. Among meme tokens, Dogecoin (DOGE) decreased by 3.4%.
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