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Bitcoin Price Drops Due to Mt. Gox Sale Fears, Analytics Firm Offers Reassurance
In response to fears of a potential sale of Bitcoin (BTC) causing a drop in its price, an analytics company has issued a statement to provide some reassurance.
Author:
Mete Demiralp
24.06.2024 – 19:03
Update:
5 seconds ago
0
Bitcoin (BTC) saw a significant decline on Monday, leading to a sharp downturn in the cryptocurrency market. The catalyst behind this was the announcement by the currently inactive Mt. Gox crypto exchange that it intends to return over 140,000 BTC to its customers. These customers had their assets stolen in a high-profile hack back in 2014.
The market is now facing the potential impact of over 140,000 BTC potentially flooding the market in less than a month. To put this into perspective, this number is just slightly less than the immediate liquidation of Fidelity’s spot Bitcoin ETF, which currently holds 167,375 BTC.
However, Alex Thorn, director of research at Galaxy, believes that the market may be overestimating the effect of this. “We believe that fewer coins will be distributed than anticipated, resulting in less selling pressure on BTC than the market is anticipating,” Thorn stated.
According to Thorn’s research, it is expected that 75% of creditors will receive their payments “early” in July, which would equate to a distribution of around 95,000 coins. Of these, Thorn estimates that 65,000 coins will go to individual creditors, who he suggests may be more resistant to selling than anticipated. Given the significant increase in the value of Bitcoin since the crash, along with capital gains taxes, these creditors have already resisted “compelling and aggressive offers from demand funds” for years.
In terms of demand funds, Thorn suggests that most partners in these funds are high-net-worth individuals looking to increase their Bitcoin holdings at a discount, rather than traders seeking quick and profitable trades. This could further alleviate the selling pressure on the market.
As a result, analysts believe that while the return of Mt. Gox BTCs may initially appear to pose a threat to the market, the actual impact may be less severe than feared.
*Please note that this is not investment advice.
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