Mt. Gox and US Gov’t Could Release $14B in Bitcoin
Mt. Gox and the US gov’t could release $14B in Bitcoin, potentially increasing selling pressure and impacting its price in September.
$14 Billion Bitcoin Selling Pressure from Mt. Gox, US Government
Bitcoin could face significant selling pressure as the US government and the defunct Mt. Gox exchange are set to release nearly $15 billion worth of Bitcoin (BTC) into the market. This influx of BTC may negatively impact the price of cryptocurrency.
The US government holds over 203,000 BTC, valued at $12.1 billion, while Mt. Gox is preparing to distribute an additional 46,000 BTC, worth about $2.7 billion, to creditors. The combined $14.8 billion in potential selling pressure raises concerns among investors about Bitcoin’s future price movements.
Despite these concerns, market analysts suggest that the impact might not be as severe as feared. Previous distributions from Mt. Gox, like the nearly $4 billion worth of BTC released earlier, did not lead to a significant market downturn. Many creditors chose to hold onto their BTCs rather than sell, reflecting confidence in the asset’s long-term value.
Market Anticipates the Impact of Bitcoin Influx
However, the upcoming releases could still influence market behavior, considering the lack of liquidity that has characterized the market over the summer. As BTC struggles to stay above critical price levels, including the psychological $60,000 mark, any additional selling pressure could weigh heavily on its price.
Kaiko, a crypto analytics firm, has noted that while the Mt. Gox repayments are unlikely to cause structural market issues, they could lead to increased slippage and short-term volatility. Meanwhile, Mt. Gox creditors have been waiting for over a decade to receive their Bitcoin, which has seen a staggering 8,500% appreciation since the exchange’s collapse.
This significant appreciation might incentivize some creditors to cash out. Still, historical data suggests that a large portion of these distributed coins may not be immediately sold. With Bitcoin’s price already subdued, the potential influx of $14.8 billion worth of BTC could further complicate its recovery.
Analysts from Bitfinex have pointed out that Bitcoin’s average returns in September have historically been negative, adding to the concerns about its ability to break through the current resistance levels.
Bitcoin Hashprice Slump and Potential Bottom
Meanwhile, Bitcoin’s hashprice, a critical indicator of miner profitability, is raising eyebrows as it hits levels typically seen during market bottoms. Recent data from CryptoQuant reveals that Bitcoin’s current hashprice is reminiscent of the conditions that preceded the cryptocurrency’s explosive rally in 2020, suggesting a potential buying opportunity.
Hashprice is a metric used to gauge miners’ earnings per terahash of computing power. It’s a crucial indicator for understanding the health of the mining sector.
When hashprice drops, it often reflects increased stress on miners, who are forced to either continue operations at a loss or shut down their machines. Historically, these periods of low hashprice have aligned with significant market bottoms for Bitcoin.
CryptoQuant’s analysis highlights that the current low hashprice is a critical signal. The platform’s data shows that similar conditions were last seen following the market crash triggered by COVID-19 in March 2020.
During that period, Bitcoin’s price was near its lowest point, yet it set the stage for a massive price surge later that year. The analysis suggests that Bitcoin’s price could be nearing another significant low, with the potential for a strong rebound if historical patterns hold.
This view is supported by CryptoQuant contributor Woo Mink-yu, who points out that periods of low hashprice have historically coincided with BTC’s price bottoms.
Miners Return to Accumulation as Market Stabilizes
In addition to the hashprice, the cryptocurrency’s mining difficulty has recently increased by 3%, bringing it close to all-time highs. This increase reflects the growing competition among miners, even as profitability remains tight.
However, this competition might also stabilize the price, preventing further declines unless BTC’s price dips significantly below the current levels. Moreover, miner behavior has been shifting in recent months after a period of increased outflows.
According to CryptoQuant, known miner wallets have seen an increase in their BTC reserves. This accumulation trend is noteworthy, as it suggests that miners might be anticipating higher prices in the near future despite the current profitability challenges.
