Exploring the World of Cryptocurrency
Bitcoin’s value took a sharp dive recently due to concerns about the potential sale of Bitcoin by Mt. Gox, a long-dormant cryptocurrency exchange. In response to these fears, an analytics firm has issued a statement to provide some reassurance to the market.
Author:
Mete Demiralp
24.06.2024 – 19:03
Update:
24 hours ago
0
On Monday, Bitcoin (BTC) experienced a significant pullback, causing a ripple effect throughout the cryptocurrency market. The trigger for this decline was the announcement by Mt. Gox, which stated its intention to return over 140,000 BTC to customers. These assets had been stolen in a well-known hack back in 2014.
The market is now grappling with the potential impact of over 140,000 BTC flooding the market in a short period of time. To put this into perspective, this amount is slightly less than the immediate liquidation of Fidelity’s spot Bitcoin ETF, which currently holds 167,375 BTC.
However, Alex Thorn, the director of research at Galaxy, believes that the market may be overestimating the potential impact of this influx of BTC. “We believe that fewer coins will be distributed than people anticipate, leading to less selling pressure on BTC than the market expects,” Thorn stated.
According to Thorn’s research, 75% of creditors are expected to receive payment in early July, resulting in a distribution of approximately 95,000 coins. Thorn estimates that 65,000 of these coins will go to individual creditors, who may be more resistant to selling than anticipated. Given the significant increase in Bitcoin’s value since the 2014 crash, as well as potential capital gains taxes, these creditors have already resisted “compelling and aggressive offers from demand funds” for several years.
Thorn also suggests that most partners in these demand funds are high-net-worth individuals seeking to increase their Bitcoin holdings at a discount, rather than traders looking for quick profits. This dynamic could further alleviate the selling pressure on the market.
As a result, analysts believe that while the return of Mt. Gox’s BTC may appear to be a threat to the market initially, the actual impact may be less severe than feared.
*This is not investment advice.
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