Mt. Gox has started distributing funds to creditors nearly a decade after the exchange filed for bankruptcy protection. The price of bitcoin sold off sharply following the news, and briefly dropped under $54,000 during Asian trading hours.

In a July 5 notice, the Japan-based exchange notified creditors that the exchange’s Trustee Nobuaki Kobayashi had started repayments in bitcoin and bitcoin cash in accordance with the Rehabilitation plan.

Onchain analytics firm Arkham flagged a transaction from a wallet address associated with Mt. Gox, which shows the movement of 47,228 BTC worth around $2.71 billion dollars from cold storage to a new wallet.

The Mt. Gox repayments were always expected to be a catalyst for downward pressure on bitcoin. Incidentally, news of the repayments came shortly after the German government moved another $175 million worth of bitcoin to centralized exchanges and external wallets, which Arkham expects will be used to fund an over-the-counter trade.

The market’s leading digital asset dropped to a low of $53,717 as selling pressure intensified, and was trading nearly 8% lower over the last 24 hours. Liquidations across the digital asset market were also significant over this period, with data from CoinGlass showing that over $685 million was liquidated from crypto traders.

Unsurprisingly, the largest liquidations were those in long positions — bitcoin longs alone saw $185 million worth of liquidations, while ether longs saw $145 million liquidated.  The single largest single liquidation order happened on Binance on an ETH/USDT pair with a value $18.5 million. 

Some industry watchers, such as Galaxy’s head of research Alex Thorn, have hypothesized that fewer coins will be distributed by Mt. Gox and the ultimate sell pressure on bitcoin will be far less than market participants’ expectations. 

However, market sentiment appeared to be largely negative at the time of writing, with the Crypto Fear and Greed indicator now shifting deeper into “fear” territory.

“Markets have continued to bleed, and social media is now showing historic levels of FUD. It is rare for an hour to go by where there are more mentions of ‘sell’ than there are ‘buy’ across crypto forums,” wrote market intelligence platform Santiment on X.