Key Takeaways:
Bitcoin (BTC) hit a monthly low on Monday after losing more than 10% of its value in less than a week. The world’s largest cryptocurrency by market capitalization dropped from a comfortable position above $65,000 to below $59,000 before rebounding to $62,000 by Tuesday.
Bitcoin started the year on the front foot, driven largely by the investor demand for the newly launched spot Bitcoin exchange-traded funds (ETFs) in the US, which propelled its price to a record high of $74,000 in March. However, since then the apex cryptocurrency has been losing value due to a range of market factors.
Mt. Gox Announces $9 Billion BTC Payout to Customers Affected by 2011 Hack
Collapsed crypto exchange Mt. Gox has announced it will start repaying creditors who lost their assets to a hack over a decade ago. The once world’s largest Bitcoin exchange will return more than 141,900 BTC, valued at approximately $8.7 billion, to creditors beginning in July.
More than 60,000 BTC, worth $3.66 billion at the current market rate, was stolen during the 2011 hack. Mt. Gox declared bankruptcy and shut down operations three years later in 2014.
Mt. Gox’s trustee is expected to initiate the payments in BTC and Bitcoin Cash (BCH) next month. The now-defunct exchange holds about 141,687 BTC, worth nearly $9 billion. There were reports that some Mt. Gox investors began receiving settlements for their lost assets earlier this year.
Analysts at H.C. Wainwright are uncertain how much of the distributed Bitcoin will be sold by the creditors. They don’t expect most coins to be liquidated in the short term because these early Bitcoin investors have a “HODL mentality and very low-cost bases”.
Analysts Warn Bitcoin Could Fall To $40,000 If It Loses Major Support Area At $60,000
Meanwhile, analysts at the LMAX Group say Bitcoin’s price could weaken even further due to a host of macroeconomic factors.
Market strategist Joel Kruger says the US Federal Reserve’s shift to a less investor-friendly outlook than expected, and yields moving in favor of the dollar is weighing on crypto assets. He also noted that the recent outflows from Bitcoin ETFs haven’t done anything to bolster “investor appetite”.
Bitcoin spot ETFs from VanEck (HODL), Grayscale (GBTC), BlackRock (IBIT), and Valkyrie (BRRR) were among those that recorded the most outflows this week, losing more than 4% of their value.
Kruger said Bitcoin is approaching a major support area into $60,000, which could be the setup for the next big bounce aiming for “fresh record highs”. He also warned that BTC could drop as low as $40,000 this year if it were to break below the $60,000 mark.
AI Firms Are Teaming Up With Bitcoin Miners To Quench Their Thirst For Computing Power
Elsewhere, AI-linked Bitcoin miners continue to outperform pure-play miners. The former’s stock has risen by 11.5% compared to a mere 1.4% increase for the latter group. This surge comes after several publicly listed Bitcoin miners disclosed their exposure to artificial intelligence companies.
AI and high-performance computing (HPC) firms are increasingly looking at the Bitcoin mining industry to secure their need for computing power to run data centers. Miners already have the computing capacity and deal with power suppliers that AI firms desperately need.
Miami-based miner Hut 8 received a $150 million investment from tech-focused investment manager Coatue Management via a convertible note to build data center infrastructure for AI.
In a press release, Hut 8 wrote that traditional data centers are failing to meet the surging demand for AI computing capacity due to power shortages, long lead times to bring new capacity online, and the extensive upgrades required to amp up existing data centers.
The company believes it can utilize its Bitcoin mining infrastructure to address this unmet demand and emerge as a leader in the AI infrastructure market.
Earlier this month, Core Scientific announced that it has signed an agreement with AI-hyper scaler CoreWarve to provide 200 megawatts of energy for AI cloud computing services. The Bitcoin miner will modify several of its existing sites to host CoreWaeave’s Nvidia GPUs.
Stocks of AI-Linked Bitcoin Miners Perform Better Than Their Pure-Play Counterparts
JPMorgan analysts say the rising demand for power by large-scale data centers and AI firms could kickstart a new era of mergers and acquisitions for Bitcoin miners with attractive energy contracts.
The bank noted that the total market cap of the 14 Bitcoin miners it tracks spiked 22% following Core Scientific’s announcement. During the same time, BTC has retreated about 7%.
Hut 8’s stock rallied nearly 6% on Monday morning, while other miners such as Riot Platforms and Marathon Digital rose 3.6% and 1.8% on Tuesday after a slow start to the week.
MicroStrategy Acquires $786 Million Worth of BTC, Bringing its Total Bitcoin Holdings To Nearly $14 Billion
Last week, Nasdaq-listed software firm MicroStrategy announced that it acquired an additional 11,931 BTC for $786 million. The Bitcoin was purchased at an average price of about $65,900 per token. The latest acquisition brings the company’s total holdings to 226,331 BTC, worth just under $14 billion.
MicroStrategy is the world’s latest corporate holder of Bitcoin. The business software developer began buying BTC for its treasury in 2020.
At the time of writing, Bitcoin (BTC) is trading at $60,816 – down 1.31% over the last 24 hours.
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