The prospect of a large-scale selloff from Mt. Gox wallets has raised concerns within the crypto community.
Blockchain security firm PeckShield reported that a Mt. Gox-related address has transferred 1,550 BTC, valued at $85 million, to Bitbank. PeckShield also noted that earlier today, a Mt. Gox-labeled address moved a staggering 47,200 BTC ($2.7 billion) to a new address.
These significant transfers have fueled speculation about a potential selloff that could impact the broader cryptocurrency market.
#PeckShieldAlert #Mt.Gox related address 1PKGGM…zwzV has been transferred 1.55K $BTC ($85M) to #Bitbank pic.twitter.com/xXOtQMdwm5
— PeckShieldAlert (@PeckShieldAlert) July 5, 2024
Mt. Gox Repayments Begin
Mt. Gox recently announced that it has started repayments to its creditors, concluding a nearly decade-long wait for users to reclaim their lost crypto assets. The exchange collapsed in early 2014 after a hack resulted in the loss of approximately 740,000 Bitcoin.
The prospect of a large-scale selloff from Mt. Gox wallets has raised concerns within the crypto community. Given the substantial amount of BTC involved, any significant liquidation could exert downward pressure on Bitcoin prices, potentially leading to increased volatility in the market. Over the past few months, speculations around the repayments have drastically affected market sentiment, despite Bitcoin’s being in a bull run.
The commencement of repayments has added to the selling pressure on Bitcoin and the broader crypto market. Mt. Gox had indicated last month that repayments would begin in July, and this news has contributed to Bitcoin’s recent plunge to $54,000, its lowest level in five months. The drop led to over $580 million in bullish bets being liquidated.
Market participants are closely monitoring these movements, as the timing and scale of any selloff could further influence trading strategies and market sentiment.
Analysts Take on Bitcoin’s Mid-term Price
Contrary to popular speculations, analysts suggest that Bitcoin might not experience significant price drops due to the Mt. Gox repayments. Peter Chung, Head of Presto Labs, believes that the impact on BTC will be minimal. He argues that most of the Mt. Gox creditors are long-term holders, often referred to as ‘diamond-handed’ investors, who are unlikely to sell their BTC immediately.
This perspective is shared by Alex Thorn, Head of Research at Galaxy Digital, who highlighted that these creditors are typically tech-savvy early adopters of Bitcoin, further suggesting they will retain their holdings rather than liquidate.
creditors have been stuck in mt gox bankruptcy for 10+ yrs–finally trustee says in-kind distribution of #BTC #BCH will begin in july. we think fewer coins will be distributed than people think & that it will cause less #bitcoin sell pressure than market expects
here's why 👇
— Alex Thorn (@intangiblecoins) June 24, 2024
Thorn also pointed out the potential capital gains impact as a deterrent to selling, noting that the price appreciation of Bitcoin means significant tax implications for those who choose to sell now. Given these factors, the analysts predict that the anticipated selloff pressure from Mt. Gox repayments will be much less severe than the market fears.
However, this outlook contrasts sharply with the situation for Bitcoin Cash (BCH), which is expected to face substantial selling pressure due to its weaker investor base and lower liquidity. Presto Labs’ analysis indicates that the BCH market could see sales amounting to 24% of its daily trading volume, compared to just 6% for BTC.
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