TL;DR,

• A devastating crypto market crash wiped $170 billion from cryptocurrencies as Mt. Gox began repaying creditor.
• Mt. Gox trustee announced the start of bitcoin and bitcoin cash repayments to creditors, while Germany sold 3,000 bitcoins worth $175 million, creating massive selling pressure across crypto markets.
•  Industry analysts expect bitcoin recovery toward year-end once Mt. Gox selling pressure subsides, with some predicting $150,000 bitcoin and potential ethereum ETF launches boosting markets.

Over $170 billion was wiped off cryptocurrencies as the market tanks on Mt. Gox bitcoin payout fears. On Friday, the trustee for the Mt. Gox bankruptcy estate announced it had begun making repayments in bitcoin and bitcoin cash to some creditors.

The result: a crypto market crash, tanking bitcoin and Ethereum prices, shaking the entire industry.

Mt. Gox Repayments Trigger $170 Billion Crypto Market Crash

Bitcoin’s price fell under $55,000 for the first time since February. At one point, the entire cryptocurrency market shed more than $170 billion in combined market capitalisation within 24 hours, according to CoinGecko data.

On Friday, the trustee for the Mt. Gox bankruptcy estate, Nobuaki Kobayashi, said in a statement that repayments in bitcoin and bitcoin cash had begun through several designated crypto exchanges.

Ethereum Sinks 5% Amid Broader Market Contagion.

Meanwhile, the rival token, Ethereum (ether), sank around 5% to $2,971.68. This drop in the price of Ethereum contributed to the overall decline in the cryptocurrency market.

The Mt. Gox trustee did not specify how much money had been transferred to these exchanges but noted that the remaining funds would be returned to creditors once certain conditions were met.

Mt. Gox Bankruptcy Estate Begins Long-Awaited Creditor Payouts

The Mt. Gox bankruptcy estate is central to this current crypto market crash. Recently, the world’s largest cryptocurrency has been pressured by news of the collapsed bitcoin exchange Mt. Gox, preparing to distribute around $9 billion worth of coins to users.

RELATED: Bitcoin’s Next Price Targets Revealed by Top Analysts (Crypto Insights)

This dumping of coins onto the market is expected to lead to significant selling action, contributing to the bitcoin price drop and affecting overall crypto market stability. The trustee is still working to ensure repayments “can be made safely and securely,” urging “eligible rehabilitation creditors to wait for a while.”

It comes after a small amount of bitcoin was moved out of wallets associated with Mt. Gox, according to blockchain analytics firm Arkham Intelligence, with the most significant movement being a $24 transfer to the Japanese crypto exchange Bitbank. Bitbank is among the recipients listed to support repayments.

Massive $640 Million in Trading Positions Liquidated in 24 Hours

The slump in crypto prices led to hefty liquidations in the derivatives markets. According to crypto data firm Coinglass, 229,755 traders had their positions worth $639.58 million liquidated in the past 24 hours.

Of this sum, $540.46 million represented long trades — financial positions taken when an investor expects the price of an asset to appreciate over the long term. This significant liquidation event has exacerbated the crypto market crash.

Also pressuring crypto markets, the German government on Thursday sold roughly 3,000 bitcoins (worth approximately $175 million as of today’s prices) from a 50,000-bitcoin pile seized in connection with the movie piracy operation Movie2k, according to Arkham Intelligence.

Arkham, which is tracking Germany’s bitcoin wallet, noted the government still holds more than 40,000 bitcoins worth over $2 billion.

Crypto Market Recovery Expected Once Mt. Gox “Overhang” Dissipates

Industry insiders still expect bitcoin prices to climb again toward the end of the year once the expected near-term selling pressure from the Mt. Gox repayments lifts. Analysts at crypto data and research firm CCData said in a report Tuesday that bitcoin had yet to reach the top of its current appreciation cycle and is likely to hit a fresh all-time high.

Historical market “cycles” have shown that bitcoin’s so-called halving event — which cuts the supply of new bitcoins to the market — has always preceded a period of price expansion that can last between 12 and 18 months “before producing a cycle top”, CCData said in its report.

The last bitcoin halving occurred on April 19 this year, so those historical time frames have yet to pass.

Moreover, we have observed a decline in trading activity on centralized exchanges for nearly two months following the halving event in previous cycles, which seems to have mirrored this cycle. This suggests that the current cycle could expand into 2025.

Tom Lee, co-founder and head of research at Fundstrat Global Advisors, told CNBC’s “Squawk Box” on Monday that he still sees Bitcoin hitting $150,000 despite the “overhang” from Mt. Gox’s upcoming disbursement of tokens to creditors. “If I were invested in crypto, knowing that one of the biggest overhangs will disappear in July, I’d think it’s a reason to expect a pretty sharp rebound in the second half,” Lee said.

RELATED: Bitcoin etf options Approval: Bold Move for Crypto Markets

Investors are still awaiting the launch of an ether exchange-traded fund (ETF) in the U.S., which would follow the approval of the first U.S. spot bitcoin ETF in January.

In May, the U.S. Securities and Exchange Commission approved a rule change to pave the way for ETFs that buy and hold ether. At the top of the list are VanEck, BlackRock, Bitwise, and Galaxy Digital.