Bitcoin (BTC) failed to hold the $20,000 support on Aug. 27 as fears of selling by users of defunct exchange Mt. Gox added to price pressures.
Rumors about Mt. Gox are dismissed as “typical of the crypto sector”
Data from Cointelegraph Markets Pro and TradingView tracked the BTC/USD pair as it headed to fresh six-week lows, hitting $19,766 on Bitstamp.
Low liquidity over the weekend seemed to exacerbate already nervous markets, which reacted badly to unconfirmed rumors that the Mt. Gox funds were to be released to creditors on August 28.
Claims varied widely at the time of this writing, and some believed that a block of 137,000 BTC was going to be released in one go. Others said that the funds would be sent little by little, but that the payments would begin this weekend.
A point of consensus came in the form of creditors allegedly wanting to sell BTC owed to them, this has been out of reach since 2014 when the BTC/USD pair was trading below $500. Unrealized returns of 40X, they feared, they would be too tempting for creditors to become willing hodlers.
Mt. Gox imploded with hundreds of thousands of bitcoins almost ten years ago. After a lengthy legal procedure to deal with the funds subsequently recovered from the exchange, the designated administrator for rehabilitation, Nobuaki Kobayashi, announced on July 6 that he was “preparing the repayments” to creditors.
In the documentation at the time, Kobayashi gave “the end of August” as a reference period during which some initial payments could begin.
“Following discussions with the Court and in accordance with the Rehabilitation Plan, the Rehabilitation Administrator intends to fix the Assignment Reference Period, etc. Restriction Reference Period from approximately the end of August this year until the complete all or part of the refunds made as initial refunds so that they are safe”, said part of it.
Nevertheless, with no new official information appearing on the website dedicated to the rehabilitation procedure, it was unclear why the rumors of the sale had gained traction so quickly.
Also, this is only for those who choose the lump sum prepayment, which means they only get a portion of their bitcoin. Those who wait until the end of the civil rehabilitation period will get more, in a few years.
— Danny Devan (@dannydevan) August 27, 2022
Also, this is only for those who choose the lump sum prepayment, which means they only receive a portion of their bitcoin. Those who wait until the end of the civil rehabilitation period will receive more, which will happen in a few years.
For trader and analyst Josh Rager, meanwhile, even if the entire BTC stock were sold at once, the resulting selling pressure would not create the kind of doomsday event some envisioned.
MT GOX Launch Probably Creates More Fear Than Necessary
140k BTC = $2.8B
BTC daily trading volume $20B to $30B
These BTC will not be sold all at once https://t.co/ZLBh0HVIgs
—Rager (@Rager) August 27, 2022
MT GOX payout probably creates more fear than necessary
140,000 BTC = $2.8 billion
The daily trading volume of BTC is from $20 billion to $30 billion.
These BTC are not going to be sold all at once
“The fear surrounding the release of potentially bitcoins from Mt. Gox is simply unwarranted,” added Michael van de Poppe, Cointelegraph contributor.
“Typical in the crypto sector”
Earnings squeezed on weekend volatility
However, the latest losses caused more pain for existing BTC hodlers.
According to data from on-chain analytics firm Glassnodethe percentage of total BTC supply in profit hit a one-month low on the day just above 55%.
For their part, the oldest coins continued a trend of increasing inactivity, with the percentage of supply that last came out of their wallet two years ago or more hitting ten-month highs.
Cointelegraph recently reported that hodler habits remain largely unchanged despite the 2022 cryptocurrency market crash.
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