Bitcoin
Is Gox a Concern for Bitcoin? Crypto Analyst Evaluates
Bitcoin outflows from the Mt. Gox exchange occurred over the last day, raising some concerns about possible bearish effects. Here’s what one analyst thinks.
Gox has made several Bitcoin transactions in the last 24 hours
During the last day, several movements of wallets associated with the failed cryptocurrency exchange Mount Gox were seen on the Bitcoin blockchain. The platform has announced plans to repay its creditors, so the transactions are likely related to them.
Gox transferred 137,890 BTC in total, worth nearly $9.4 billion at the current cryptocurrency exchange rate. With these transfers, the market has become concerned about whether these tokens will advance to trading, increasing selling pressure in the market.
As a result, the price of BTC has fallen by around 4% in the last 24 hours. Although the market has reacted negatively to the news so far, some question whether these withdrawals are truly bearish.
Analyst James Van Straten discussed this in an X publish and provided perspective on how a potential sell-off arising from these refunds would compare to one BTC has recently witnessed.
The distribution event in question is from long term holders (LTHs), which constitute one of the two main divisions of the BTC market based on holding time.
All investors who have held their coins for more than 155 days qualify for this cohort, while those who purchased in the last 155 days are placed in the short-term holder (STH) group.
LTH are considered the resolute side of the market as they rarely participate in selling, while STH are the fickle investors who regularly react to sector events through panic selling.
The asset’s recent rally, however, has proven to be enough to drive even these HODLers to sell, as the chart below shows its total supply.
As the chart shows, LTH supply has been moving sideways in recent months, but was in decline for five months before that.
In this sell-off, LTHs sold around 1 million tokens, of which around 340,000 BTC were tied to GBTC Outputs. At the same time, this distribution of LTHs occurred even though the price of the coin reached a new all-time high, implying that the market could perfectly absorb this enormous selling pressure.
Straten notes that Mt. Gox refunds only represent about a tenth of this settlement, and not everyone who receives these tokens will decide to sell them. At the very least, they wouldn’t all sell at the same time.
Therefore, given this fact, it is possible that Bitcoin will not be affected by this distribution if demand for the cryptocurrency remains as strong as it has been recently.
BTC Price
Bitcoin had risen above the $70,000 level previously, but the Mt. Gox news dropped the asset to $67,700.
Featured image from Dall-E, Glassnode.com, chart from TradingView.com