in Crypto

Here’s Why Bitcoin and Ethereum Prices Crashed

The cryptocurrency sector has recently seen a substantial reduction in its overall market capitalization, as prices dropped sharply over the weekend. This decline was particularly noticeable as Bitcointhe largest cryptocurrency by market value, fell below $60,000 on Saturday, August 3. Ethereum, the second-largest cryptocurrency, also suffered significant losses, falling below $3,000 and hitting a low of $2,860. This prompted other cryptocurrencies to follow suit, with most immediately turning red.

Such volatility is not uncommon in the cryptocurrency space, where prices often fluctuate dramatically in response to various factors. These price swings are typically driven by market reactions to recent news or events. In this case, the latest price drops can be attributed to Repayment plans band bankrupt cryptocurrency lender Genesis Global Capital.

Genesis Moves $1.5 Billion Into Cryptocurrency

Genesis Global Capital, a bankrupt cryptocurrency lender, has finally completed its restructuring and is now on track to repay its debt to creditors after three years. Second According to Bloomberg, the lender immediately began distributing about $4 billion in cryptocurrencies and fiat currencies to its creditors.

Distribution details indicate that Bitcoin creditors will receive 51.28% of their claims, Ethereum creditors will get 65.87%, and Solana creditors will only get 29.58%.

The total cryptocurrency market capitalization is currently $2.1 trillion. Chart: TradingView

As such, Genesis moved over $1.5 billion in Bitcoin and Ethereum on Friday, triggering a wave of market volatility. According to on-chain data from Arkham Intelligence, the company moved a total of $1.5 billion, which included 16,600 BTC (valued at about $1.1 billion) and 166,300 ETH (valued at about $521.1 million). Among the most illustrious recipients was billionaire Mark Cuban, who received Refunds worth $19.9 million in Ethereum.

Market reaction

As a result, many investors appear to have responded to the impending influx of new money by liquidating their holdings, which in turn has contributed to a decline in the prices of many already struggling cryptocurrencies. The price decline could also be attributed to repaid creditors deciding to cash in their digital assets after a prolonged three-year wait, thus increasing selling pressure and exacerbating the price decline.

The cryptocurrency market has seen a sharp decline, dropping by over 5.7% in 24 hours, bringing the market cap to $2.15 trillion. As previously noted, Bitcoin has fallen below the $60,000 mark, and Ethereum has fallen below $2,900.

Genesis Global Capital isn’t the only bankrupt cryptocurrency firm recently engaged in creditor repayments. Bankrupt Bitcoin exchange Mt. Gox has also been repay his creditors for the last few weeks. The market could continue to react to these large movements of funds as creditors receive their refunds.

Featured image from 123RF, chart from TradingView

Written by Anika Begay

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