The cryptocurrency industry recently experienced a substantial reduction in its overall market capitalization as prices plummeted sharply over the weekend. This downturn was particularly notable as Bitcoin, the leading cryptocurrency by market value, fell below the $60,000 mark on Saturday, August 3. Ethereum, the second-largest cryptocurrency, also faced significant losses, dipping below $3,000 and reaching a low of $2,860. This caused other cryptocurrencies to follow suit, with most bleeding red immediately.
Such volatility is not uncommon within the crypto 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 instance, the latest price declines can be attributed to repayment plans by bankrupt crypto lender Genesis Global Capital.
Genesis Moves $1.5 Billion In Crypto
Genesis Global Capital, a bankrupt crypto lender, has finally completed its restructuring and is now in the process of repaying its debt to creditors after three years. According to Bloomberg, the lender has now started giving its creditors an immediate distribution of about $4 billion in both cryptocurrencies and fiat currencies.
The distribution details indicate that Bitcoin creditors will receive 51.28% of their claims, Ethereum creditors will obtain 65.87%, and Solana creditors will get only 29.58% of their claims.
As such, Genesis moved over $1.5 billion worth of Bitcoin and Ethereum on Friday, which triggered a wave of market volatility. According to on-chain data from Arkham Intelligence, the firm moved a total of $1.5 billion, which included 16,600 BTC (valued at roughly $1.1 billion) and 166,300 ETH (worth about $521.1 million). Among the notable recipients was billionaire Mark Cuban, who received $19.9 million worth of Ethereum in repayments.
BREAKING: GENESIS MOVING $1.5B BTC + ETH FOR CREDITOR REPAYMENTS
Wallets linked with Genesis Trading have moved 16.6K BTC ($1.1B) and 166.3K ETH ($521.1M) in the past hour – likely for in-kind repayments to creditors.
BTC: bc1qmetf6pu6ghr6fv92209sw5x9t5999562t8wmux
ETH:… pic.twitter.com/5Jtxqx8mxT— Arkham (@ArkhamIntel) August 2, 2024
Market Reaction
As such, many investors seemed to react to the upcoming influx of new money by liquidating their holdings, which in turn contributed to a drop in the prices of many already struggling cryptocurrencies. The price decline could also be attributed to repaid creditors deciding to cash out their digital assets after a prolonged wait of three years, thereby adding to the selling pressure and exacerbating the price drop.
The cryptocurrency market experienced a sharp decline, decreasing by over 5.7% within 24 hours, bringing the market capitalization down to $2.15 trillion. As previously noted, Bitcoin fell below the $60,000 mark, and Ethereum dropped below $2,900.
Genesis Global Capital is not the only bankrupt crypto company engaged in creditor repayments recently. Bankrupt Bitcoin exchange Mt. Gox has also been repaying its creditors for the past few weeks. The market could continue to react to these large movements of funds as creditors receive their repayments.
Featured image from 123RF, chart from TradingView