The activity surrounding the Mt. Gox payout may have been one of many factors that contributed to Bitcoin becoming overbought in recent weeks, ultimately driving the digital asset’s price below $64,000. The price drop also had an impact on the broader cryptocurrency market, with Bitcoin falling 3% in 24 hours and at least $1,000 in one hour alone.

After years of waiting, cryptocurrency exchange Mt. Gox emptied four wallets after receiving $370,000 worth of Bitcoin from Kraken, a highly anticipated payout. Experts point out that the transfer of assets to cryptocurrency exchanges to repay creditors has affected supply and demand trends, causing Bitcoin to become overbought due to excess supply.

When the cryptocurrency exchange Mt. Gox collapsed in 2014, the price of Bitcoin was $600, and now its price range is between $63,000 and $65,000. The surge in sell orders in the cryptocurrency exchange space may also mask the demand for U.S. BTC spot ETFs.

According to Arkham Intelligence, Mt. Gox holds 44,905 bitcoins, worth more than $2.82 billion at current BTC prices. Concerns that the Mt. Gox payout could lead to an oversupply have become a reality as recipients cash out.

10x Research believes that the decline in Bitcoin prices has reproduced a typical overbought bull market. Markus Thielen, founder of 10X Research, said that his company had warned a few days ago that Bitcoin would be overbought in the short term. He said that it was obvious that only short-term bearish reversal signals could be expected, leading to a correction that could last for several days.

Thielen believes that the bearish trend that led Bitcoin to fall below $64,000 was planted with the release of the U.S. ISM manufacturing data in June. This shows that the continued decline fits the pattern that is usually characterized by a price sell-off of at least 10%. Thielen said that the September report, which is expected to be released this week, will confirm that manufacturing activity fell in the last month of the third quarter.

Mt. Gox (short for "Magic Online Exchange") was founded in 2009 by American software hacker Jed McCaleb as a website for people to trade "Magic: The Gathering" game cards, and quickly grew into the world's leading cryptocurrency exchange. However, Mt. Gox collapsed in February 2014 due to a series of thefts, with more than 950,000 Bitcoins disappearing. The exchange's directors attributed the disappearance of such a large amount of customer funds to errors in the exchange's framework.

At least 140,000 lost Bitcoins have been recovered after Mt. Gox filed for bankruptcy protection, meaning nearly $9 billion worth of Bitcoin will be returned to its owners. At the time of the exchange's collapse, Bitcoin was retailing at $600, but today it's $64,000, a nearly 10,000% increase. In July 2024, data from Arkham Intelligence showed that the exchange had moved billions of dollars worth of Bitcoin from its cryptocurrency wallets in preparation for the upcoming Mt. Gox payout. Arkham Investments shows that more than 47,000 Bitcoins have been moved from Mt. Gox wallets.

Arkham Investment’s report shows that the exchange paid at least $84.9 million to BitBank. The Japan-based cryptocurrency exchange was listed as one of the platforms that would be used to facilitate the payments from Mt. Gox. The report states that the exchange also paid $63.6 million to an undisclosed counterparty, which they believe is also a listed repayment exchange.

While it is unclear how the world’s largest cryptocurrency exchange collapsed almost overnight a decade ago, it is ironic that the crash occurred just as Bitcoin was beginning to gain popularity among the general public. Overbought Bitcoin brought an unprecedented drop to one of September’s biggest price rallies, undermining the idea that September has been a bullish month for cryptocurrencies. September’s strong start appears to have ended with BTC facing stiff resistance, and investors can only hope that the situation will reverse in the fourth quarter of 2024, bringing better returns.

The article is for reference only and does not constitute investment advice.