The cryptocurrency market crash that has impacted assets such as Bitcoin, Shiba Inu, and XRP is attributed to four main factors.
The cryptocurrency market has taken a hit lately, Bitcoin (BTC) and other major digital assets are seeing significant declines. With BTC down 1.65% this morning, the leading cryptocurrency has plunged 6.11% from its July 22 high of $68,000.
Altcoins are seeing similar declines. XRP is close to recouping yesterday’s 3.46% gain, but is down more than 1.5% today. XRP’s Saving Grace support at $0.60Meanwhile, Shiba Inu (SHIB) is down 10% from its peak of $0.00001832 on July 22 and 2.74% this morning on greater volatility.
Notably, four key factors have contributed to this decline, causing concern among investors and market analysts. Here’s a closer look at what’s going on.
Bitstamp and Kraken Distribute Bitcoin to Mt. Gox Creditors
The defunct Mt. Gox exchange, which went bankrupt in 2014 after losing 850,000 bitcoins in a major security breach, has finally reopened. started paying off debts to creditors.
This long-awaited repayment includes the distribution of 142,000 BTC and 143,000 BCH. Mt. Gox will distribute the tokens to creditors via centralized exchanges. Bitstamp and Kraken are already facilitating the distribution, with Bitstamp having a 60-day window and Kraken up to 90 days to complete the payments.
Bitstamp has dedicated to the idea accelerate the distribution, aiming to complete it well before the 60-day deadline. Similarly, Kraken is also starting to release funds. The large volume of Bitcoin entering the market has led to increased selling pressure, contributing to the current market downturn.
Kraken has started airdropping Gox coins pic.twitter.com/cOxXQaC5p0
— Punch (@Punch0x1) July 23, 2024
There were concerns that many creditors might decide to liquidate their assets immediately. However, data shows that most Kraken users held on to their tokens, which did not alleviate concerns.
US Stock Market Crash
Another event that contributes to the market’s decline is the dynamics of US stocks. Recently, the US stock market experienced a massive crash that wiped out more than $1.1 trillion.
This loss has impacted traditional financial markets and has further spilled over into the cryptocurrency space. Historically, there has been a significant correlation between the performance of traditional markets and cryptocurrencies.
When the stock market suffers, risk assets like Bitcoin often follow suit as investors liquidate their holdings to cover losses or seek safer investments. The spillover also contributed to the decline of XRP and Shiba Inu.
S&P 500 and NASDAQ Decline
S&P 500, NASDAQ fall as stock market plunges experienced their worst performance in two years. Market data confirmed that the S&P 500 fell 2.3% yesterday.
The decline has further exacerbated negative market sentiment. As leading indicators of economic health, the performance of the S&P 500 and NASDAQ indices often lead to broader pullbacks in various asset classes, including cryptocurrencies.
$4 Billion in Bitcoin Options Expiring
Another important factor affecting the cryptocurrency market is the approaching expiration of Bitcoin options worth about $4 billion. Deribit data confirms that Bitcoin has a total open interest of 60,869 options with a national value of $3.9 billion as of tomorrow, July 26. The maximum price of these options is $63,000.
The potential expiration of such a large volume of options contracts contributed to market volatility as traders would be forced to either sell their positions or roll them over to expiration.
