Bitcoin plunges 3% on Mt. Gox redemption, GBTC outflows, and Meta overlap

Bitcoin plunged 3% on a series of bad news. It dropped to the $64K mark. The impending redemption of Mt. Gox (Magog) and the increase in GBTC net outflows are cited as factors. The drop in ETH was even bigger, with ETH barely hovering around $3.1K at the same time. Ethereum is an altcoin, an alternative cryptocurrency to Bitcoin. Its market capitalization is second only to Bitcoin.

The downtrend seems to have been triggered by the Mt. Gox risk, which broke the day before. Mt. Gox recently announced for the first time the amount of crypto that will be returned to creditors and the date of the return, suggesting that the repayment process is imminent.

When it was founded in 2010, Mt. Gox was known as the world's largest exchange, accounting for 70% of Bitcoin trading. However, it went bankrupt in 2014 after losing 850,000 bitcoins, or 4% of the total bitcoin supply, in a hack. Since then, the crypto industry has been worried that Mt. Gox's redemptions would cause a major market crash. The scenario is that the volume of redemptions could lead to selling pressure. Current estimates put the redemption volume at $13 trillion worth of Bitcoin.

“A Mt. Gox redemption volume of $13 trillion could put negative pressure on the price of Bitcoin,” global crypto analyst K33 said in a report on March 23 (local time), adding that the redemptions are expected to start as early as next month.

A significant increase in GBTC net outflows also contributed to the drop. GBTC is Grayscale's bitcoin spot exchange-traded fund (ETF). According to Farside Investor, GBTC saw net outflows of $133.4 million (17.93 billion won) on Nov. 24, up 94.9% from the previous day. This is the fifth trading day in a row that GBTC's net outflows have exceeded $100 million.

Although it is not clear, the previous day's tech company earnings are also believed to have been a factor in the decline. Meta's results ultimately led to a decline in AI stocks.

Meanwhile, the Fear-Greed Index, compiled by global crypto data research firm Alternative, registered 72 points on the day, indicating a Greed level. This is the same as the previous day (72-Greed). The index is based on a scale of 0 to extreme fear and 100 to extreme optimism.