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8 Mar, 00:32 UTC

Bitcoin's value has experienced a significant dip, dropping around 5% in the past week. This fall in price comes as traders began to speculate that the upcoming creditor payouts from the bankrupt MT Gox exchange could impact the cryptocurrency market.

The civil rehabilitation trial surrounding the Tokyo-based bitcoin exchange has concluded, and payouts to creditors are scheduled to begin this Friday, March 10th. However, there are fears that the 137,890 bitcoin to be released to creditors could be dumped on the market as soon as they become available, causing a possible market shock.

The total amount of assets to be paid out to creditors after the 2014 hack of the MT Gox exchange will not be released to creditors immediately but at stages over the coming months. Despite this, the fear of a massive sell-off has affected the market, causing a decline in Bitcoin's value.

Additionally, Bitcoin experienced another drop in value following remarks made by Federal Reserve Chairman Jerome Powell during the Semiannual Monetary Policy Report. Powell reiterated the intention of the central bank to continue raising interest rates at FOMC meetings in the coming months, with accelerated tightening a possibility should the U.S. economy not show signs of cooling.

Powell's remarks, coupled with the news of potential crypto tax reform plans, could have a negative impact on the cryptocurrency market as investors may shift their focus to traditional investments with higher yields. In addition, the recent news about the potential demise of Silvergate Bank, a key financial infrastructure provider for exchanges, institutional investors, and mining companies, has caused concerns among investors, leading to a decline in Bitcoin's value.

Experts believe that Bitcoin is likely to recover in the long run as it has done in the past after similar drops in value. However, the combination of these factors has led to a decline in Bitcoin's value, causing uncertainty in the market. Investors will be watching closely to see how the market responds to the upcoming creditor payouts from MT Gox and any future policy decisions made by the Federal Reserve.