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Bitcoin Recovers After Touching One-Month Low

Bitcoin pares losses, recovering from a one-month low, despite concerns creditors of collapsed crypto exchange Mt Gox could flood the market by dumping bitcoin.

Bitcoin dropped to a one-month low on Friday and was on track for its worst week in six months as investors kept to the sidelines in anticipation that creditors of collapsed crypto exchange Mt Gox might flood the bitcoin market by liquidating a chunk of their payments.

Bitcoin was down 0.1% at $58,094.18 at last check after declining nearly 5% to its lowest since mid-October and more than 20% below its record high of $66,975. For the week, bitcoin has still fallen 14% and through its 50-day moving average, though it is up more than 90% year to date.

Profit-taking -- a general term used when investors and traders sell their stakes for no specific reason -- as well as concern about more selling in the wake of a Tokyo court signing off on plans to repay creditors of Mt Gox, a crypto exchange which collapsed in 2014 after losing half a billion dollars in bitcoin, weighed on the world’s largest crypto by market value.

"Those affected will receive a large sum of bitcoin, likely happening in Q1 or Q2 of 2022. This has brought some fear into the market on a longer term horizon," Matthew Dibb, chief operating officer at Singapore-based crypto asset manager Stack Funds, told Reuters, adding that he expects the digital currency to find support at around $53,000.

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More recent regulatory developments including central banks and governments pondering changes that could result in more oversight of bitcoin and other digital assets and more exposure to taxes were also cited as reasons for the broader crypto pullback.

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U.S. lawmakers on Thursday introduced a bill to amend the crypto-related provisions in the bipartisan infrastructure bill signed into law earlier this week. The proposed amendments could clarify certain tax rules for crypto-related companies. The House is expected to vote on the $2 trillion package on Friday.

Ether, mthe world’s second-largest cryptocurrency by market capitalization, was also on the rebound on Friday. After falling nearly 3%, the digital token was up 4.11% at $4237.96. It hit an all-time high of $4,800 earlier this month.