Upcoming Distribution of 142,000 BTC
Just as the market absorbed Germany’s sale of 50,000 BTC, a new challenge arises. Former clients of the bankrupt crypto exchange Mt.Gox will soon receive 142,000 BTC. Analysts believe 99% of these coins will be sold immediately. This could push Bitcoin below $50,000.
Temptation to Cash Out
The concern stems from Bitcoin’s 130-fold increase since then. Even with losses from hacks, every $100 of client funds is now worth $3,300. The temptation to cash out is significant. The rate at which clients sell will influence Bitcoin’s ability to resist new pressure.
Not All BTC Distributed in July
Not all Mt.Gox coins will be distributed in July. Twenty-five percent of clients declined the expedited payout, opting for full compensation through court. Additionally, two major funds receiving 30,000 BTC intend to delay selling. Thus, Mt.Gox-related pressure this year will not exceed 75,000 BTC, or $5 billion.
Transfers to Kraken
Research firm Arkham Intelligence reports $3 billion already transferred to Kraken. Former Mt.Gox clients registered on the exchange received notices. Funds will be distributed within 7-14 days.
Impact on Bitcoin Dynamics
Bitcoin’s dynamics will depend on the sell-off speed. CoinShares analysts predict a 19% price drop (to $53,000) if 45,000 BTC are sold in a day. However, if the same volume is sold over 30 days, the market will barely notice. The average monthly spot market turnover exceeds $1.5 trillion. Additionally, rising external demand helps. Last week, crypto ETFs alone bought $1.4 billion in Bitcoin, mitigating Germany’s sell-off impact.
Short-Term Negative Effect
Predicting former Mt.Gox clients’ actions is challenging. However, any negative effect will likely be short-term.
