SINGAPORE (Reuters) – Bitcoin hit a four-month low on Friday, breaking through technical supports as traders anticipated a defunct Japanese exchange dumping long-lost tokens and further selling by leveraged players spooked by momentum.
The price of the world’s largest cryptocurrency fell more than 8% to $53,523, below chart support around $55,000 and its lowest level since late February.
The stock has lost about 12% since the start of the week, even as many of the risk-sensitive assets it tends to track, such as the Nasdaq, have gained.
Ether fell 9% to $2,841, its lowest level in more than two months.
Mt. Gox, the world’s largest cryptocurrency exchange before its collapse a decade ago, may begin returning bitcoins to its creditors, who are seen as likely sellers since the token was worth just a few hundred dollars in 2014, according to media reports.
“The selling pressure is still related to selling by creditors of the failed Mt Gox exchange,” said Tony Sycamore, market analyst at IG.
“However, the downward acceleration suggests that the market is trying to get ahead of creditor flows.”
Analysts also highlighted concerns that Joe Biden could be replaced as the Democratic presidential nominee by someone less pro-crypto after a shaky debate performance with rival candidate Donald Trump.
Bitcoin had a strong start to the year after the launch of exchange-traded funds in the United States, which propelled it to a record high of $73,803.25 in mid-March. However, it has since struggled.
“With an asset that has been in a fairly long price range and is recently at the lower end of that range, there are a lot of margin positions,” said Justin D’Anethan of digital asset market maker Keyrock, who are forced to sell when prices drop.
“This of course creates a cascade effect, pushing prices lower than would be the case in a market with less leverage.”
(Reporting by Ankur Banerjee, Tom Westbrook and Sameer Manekar in Singapore; Editing by Edwina Gibbs and Kim Coghill)
