Bitcoin's plunge: political uncertainty and supply fears shake the market

Bitcoin tumbled to a four-month low on Friday, heading for its worst weekly performance in a year, with its decline driven by uncertainties surrounding Joe Biden's potential continuation as the Democrats' US presidential candidate and concerns over possible increases in crypto supply.

Prices for Bitcoin fell by 5 per cent to as low as $55,366, the lowest since the end of February, and recorded a 10 per cent loss for the week. Ether also slid by 8 per cent to $2,891, marking its lowest level in a month and a half.

Bitcoin was on a strong run in the first quarter after reaching an all-time high of $73,803.25 in mid-March when the first US exchange-traded fund was launched. From that all-time high, it has lost more than 21 per cent of its value.

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Market players are now concerned that Biden could be replaced with a more anti-crypto advocate as far as the Democratic Party's presidential nominee; after a dismal performance in the first debate compared to Trump.

To pile on the problems, market observers pointed out reports that Mt. Gox, the former leading cryptocurrency exchange until it went defunct in 2014, is currently repaying its creditors. This is fuelling the likelihood of Bitcoin possibly coming under more downward pressure in the case that such creditors should decide to divest such coins.

This has been a factor in the fall of Bitcoin because investors are nervous about political risk, coupled with the possibility of too much supply in the market.