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Mt Gox cryptocurrency exchange collapse triggers market panic, Bitcoin plummets

TraderKnows
TraderKnows
07-08

The recent market panic triggered by the collapse of cryptocurrency exchange Mt Gox is widening, causing a sharp drop in the prices of various cryptocurrencies as they are widely sold off.

Bitcoin plummeted in early Asian trading on Monday, reversing a slight weekend rebound and hitting a new low not seen in over four months, due to concerns that the defunct cryptocurrency exchange Mt Gox might release a large supply of tokens.

As of 21:28 Eastern Time (01:28 GMT), Bitcoin, the world's largest cryptocurrency, fell 5.8% in the past 24 hours to $54,601.7, nearing its lowest level since late February. Bitcoin also broke through the crucial $55,000 support level.

For the past two weeks, Bitcoin has been under enormous downward pressure due to market concerns over the distribution of Mt Gox tokens. Last week, the exchange's trustee announced they had begun distributing the tokens stolen in the 2014 hack to creditors via multiple exchanges, though they did not specify the number of tokens returned.

Earlier this year, it was discovered that wallets associated with the exchange had moved approximately $9 billion worth of Bitcoin.

Mt Gox has been a major point of contention in the cryptocurrency market, as traders speculate that given the substantial increase in Bitcoin's price over the past decade, creditors receiving the tokens might sell them on the open market, increasing the token supply.

Concerns over this situation have triggered widespread token sell-offs, with several Bitcoin "whale" wallets also activating and selling their holdings.

The Bitcoin sell-off has affected the broader cryptocurrency market, with Ethereum, the world's second-largest token, dropping 7.3% to a two-month low.

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