Analyst: Mt. Gox Poses Significant Challenge to Bitcoin
Bitcoin faced challenges in the wake of Mt. Gox repayments and shifting market dynamics, but the downtrend should not be misconstrued as negative. Last week, Bitcoin (BTC) closed at approximately $55,850, marking an 11% decline from the previous week’s closing price of $62,775. The period witnessed notable selling pressure, with BTC dropping to $53,500 on Thursday before recovering to $58,250 and ultimately settling at $55,850.
During this downturn, BTC Spot ETFs saw $238 million in net inflows. The cumulative trading volume has reached around $315 billion since inception, reflecting a decrease in trading activity. This pattern is in line with the usual market behavior, as Q3 typically experiences reduced trading volumes.
Matteo Greco, a Research Analyst at Fineqia International, emphasized that this data should be viewed as a seasonal trend, particularly among traditional finance investors. Interestingly, the decline did not correlate with BTC Spot ETF flows, deviating from historical trends where ETF flows significantly impacted price movements.
Greco noted, “For the first time since their introduction, there is a noticeable divergence between price movements and capital flows, indicating that recent price trends have been primarily influenced by trading activities within the crypto-native sector.”
The heightened on-chain selling pressure can be attributed in part to the initiation of long-awaited Mt. Gox repayments. Mt. Gox, established in 2010 as the world’s largest Bitcoin exchange, faced a rapid downfall, ceasing trading, shutting down its platform, and declaring bankruptcy in early 2014 after revealing the loss of approximately 850,000 BTC, valued at around $450 million at that time, due to theft from its hot wallets over several years starting in late 2011.
The commencement of repayments, evidenced by the transfer of 47,228 BTC from a Mt. Gox-associated cold wallet, has spurred market responses. Furthermore, following a recent halving that halved mining rewards, miners’ selling pressure has continued to impact prices, albeit decreasing recently.
The recent decline has notably reduced unrealized profits, driven by long-term holders selling their holdings. The MVRV ratio currently hovers around 1.5, indicating an average unrealized profit of 50% among market participants, a decrease from over 200% in March.
Greco highlighted, “This trend suggests that recent price movements were predominantly influenced by long-term holders capitalizing on profits and selling their assets to new buyers at higher prices.”
