Bitcoin dropped under $58,000 for the first time since May, marking a 5% loss in 24 hours.
Mt. Gox wallets, dormant for a month, showed activity with test transactions, hinting at potential asset distributions and increased selling pressure.
Bitcoin {{BTC}} plunged under $58,000 in European morning hours, extending 24-hour losses to nearly 5% and dropping to prices not seen since early May.
The sell-off came as wallets belonging to defunct crypto exchange Mt. Gox showed signs of activity for the first time in a month and the German Federal Criminal Police Office moved over $75 million to crypto exchanges.
“Among the top reasons for the price drop was the German government moving more than $50 million to crypto exchanges, creating sell speculation in the market,” Lucy Hu, a senior analyst at crypto investment firm Metalpha, said in a Telegram message.
Mt. Gox is scheduled to start distributing assets stolen from clients in a 2014 hack this month, although it is unclear when, after years of postponed deadlines. The repayments will be made in bitcoin and bitcoin cash {{BCH}} and could add selling pressure to both markets, as previously reported.
Wallets tracked by Arkham show Mt. Gox wallets conducted test transactions in during the Asian morning, moving a total of $25 worth of bitcoin across three transactions to different wallets.
Entities holding large amounts of tokens are known to move insignificant amounts between wallets before larger transfers – which may indicate an intention to sell.
Arkham data also showed the German entity moved $175 million in BTC to various wallets, $75 million of which was sent to crypto exchanges Kraken and Coinbase. Arkham CEO Miguel More previously told CoinDesk that transfers from a wallet to an exchange may indicate an intent to sell tokens.
Meanwhile, bitcoin has now fallen below a widely followed technical indicator for the first time since October, signaling a possible downtrend in the months ahead.