Onlangs, the price of Bitcoin (BTC) hit $19,000, its lowest value in the last two months. This fall could be related to the most recent statements by Federal Reserve Chairman Jerome Powell. Furthermore, the panic caused by releasing stolen funds in Bitcoin from MtGox put additional pressure on the crypto market.
Is Bitcoin affected by inflation?
Last Friday, Powell remarked, “While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses.” For the executive, restoring price stability (which is close to its maximum in 40 years) will take some time.
This statement played an essential role in decreasing the demand for risky assets in general. As a result, both stocks and Bitcoin closed lower on Friday. But, the cryptocurrency has recovered the value of $20,100 this Monday, August 29.
Bitcoin, trading at $21,800 before Powell’s speech, posted a 4.1% drop. After the announcement, the S&P 500 index and the Nasdaq also fell, 1.92% and 2%, respectively.
In addition, cryptocurrency’s correlation with stocks weakened: in the last six months, Nasdaq has lost 4% and Bitcoin 46%. Thus, this sharp drop in the price of the cryptocurrency makes it very difficult to consider it as a hedge against inflation or digital gold, one of the primary uses that have determined the importance of this crypto active over the years.
Rumors about a Bitcoin sell-off coming from MtGox
Another factor that could be affecting the market is the rumors of 140,000 BTC coming into circulation this week.
According to information shared on Twitter, creditors would receive some $2.7 billion in Bitcoin recovered from the defunct MtGox exchange in the coming days.
However, several creditors on the MtGox exchange denied the rumors and a scenario that would negatively affect the price of Bitcoin in the event of a sell-off. However, those in charge of distributing the funds have not yet contacted those affected to ask for their address and receive the funds.
MtGox, the largest cryptocurrency exchange in 2014, suffered a hacken of 850,000 BTC when the cryptocurrency was worth $500. Since then, MtGox has located 200,000 BTC, most of which could be sent to creditors on a rolling basis in the coming months.
In addition, the creditors said that the exchange would distribute the funds through BTC, BCH, and fiat currency.
The creditors approved the plan to return the stolen bitcoins in November 2021, when the cryptocurrency price was $60,000. On that occasion, the cryptocurrency price fell slightly after the announcement.
Most cryptocurrencies work thanks to decentralized networks. However, when they are stored on custodial exchanges, scenarios like MtGox can occur. Therefore, users must choose a non-custodial exchange for their cryptocurrencies.
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