Bitcoin has dipped below $60,000 twice since last night. Capriole Fund founder speculates that the decline might be due to the initiation of repayments by the Mt. Gox exchange.
(Background:
140,000 Bitcoins flood the market? Ten questions to clarify the Mt. Gox repayment mystery)
(Additional context:
Don’t panic! Galaxy: Three reasons why Mt. Gox’s BTC pressure will be less than expected, Bitcoin rebounds to $60,000)
Contents:
$220 million liquidated across the network in the past 24 hours
What caused the market crash?
Mt. Gox is expected to start repayments in July
Analysts believe the impact of Mt. Gox’s pressure is manageable
Originally, the market expected Bitcoin to rebound in July, but optimism was dampened yesterday. BTC dropped to $59,570 around 6 PM yesterday (3rd), briefly bounced back above $60,000, but fell further to $59,375 around 5 AM today (4th). At the time of writing, it has rebounded to $60,327, marking a 3.12% decline in the past 24 hours. 10:00 AM Update: Bitcoin plummeted to $57,800, hitting a two-month low.
Bitcoin trend. Source: OKX Spot
Amid Bitcoin’s repeated market swings, data from Coinglass shows that over $220 million was liquidated across the cryptocurrency network in the past 24 hours (with long positions accounting for $200 million), affecting nearly 90,000 traders.
What caused the market crash?
Regarding the dip below $60,000 yesterday evening, Capriole Fund founder Charles Edwards posted on X, citing Bitcoin’s on-chain movements, speculating that the main reason for the decline could be due to the initiation of repayments to Mt. Gox creditors, triggering market pressure:
Mt. Gox is expected to start repayments in July
Once the world’s largest Bitcoin exchange, Mt. Gox suffered a massive hack in 2014, losing 850,000 BTC. After 10 years of bankruptcy proceedings and delays, compensations are finally being made. By October this year, Mt. Gox is expected to pay creditors 142,000 BTC and 143,000 BCH.
However, Galaxy Research Director Alex Thorn commented on X in late June, stating that the eventual Bitcoin pressure from Mt. Gox will be less than anticipated. He explained that nearly 75% of creditors chose early payout (with a 10% discount), so only about 95,000 BTC will be used for early compensation (the remaining BTC will take longer to distribute):
Approximately 20,000 tokens belong to the claim fund
10,000 tokens belong to Bitcoinica BK
About 65,000 tokens are owed to individual creditors
He also expects individual creditors to hold onto their Bitcoin more than the market expects:
Creditors are primarily long-term Bitcoin holders. They are tech-savvy early adopters.
Individual creditors have rejected attractive offers from the claim fund for years, indicating they prefer to get their Bitcoin back rather than USD compensation.
Capital gains tax impacts from sales will be significant. As prices rise, even if only 15% of physical claims are recovered, claim holders have seen a 140-fold increase in the value of their recovered Bitcoin (in USD) since the bankruptcy.
In summary, he believes Bitcoin’s selling pressure will not be as significant as investors imagine. However, due to its low liquidity, BCH might experience a more severe drop.
Currently, according to on-chain monitoring platform Arkham, no movement has been detected in the Mt. Gox wallet’s Bitcoin. Therefore, whether Mt. Gox has indeed initiated repayments, as Edwards suggested, remains to be seen (although the possibility of delayed on-chain data updates cannot be ruled out).
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