Mt. Gox weakens the forecasts on the price of Bitcoin

For some days now, the price of Bitcoin has been falling, probably due to concerns regarding the imminent distribution of Mt. Gox’s BTC, dragging down the forecasts as well. 

Release of BTC from Mt. Gox incoming: Bitcoin price predictions 

Mt. Gox is a Japanese crypto exchange that went bankrupt in 2014. At the time, it was by far the leading one in the world. 

As of today, it still holds about 142,000 BTC, but it is about to return them to creditors, and in particular to the users of the exchange who had BTC on deposit with them at the time of the withdrawal shutdown. 

According to the data from Arkham Intelligence, which monitors on-chain in real-time the movements of the known public addresses of Mt. Gox, several movements occurred today.

It should not be forgotten that currently the assets of Mt. Gox are managed by a Japanese bankruptcy trustee, and therefore they move during hours when it is daytime in Japan.

In particular, last night a single movement of over 47,000 BTC was recorded, which scared the markets. 

Just to have a benchmark, Grayscale’s ETF has never liquidated more than 16,000 BTC in a single day, so that single movement really scared the markets. 

However, according to Arkham’s data, it was an internal movement between two addresses belonging to Mt. Gox, and in fact, the total BTC held by the failed exchange remained unchanged. 

However, other movements of thousands of BTC have been recorded, so it is believed that the bankruptcy trustee is preparing to return them to the creditors. 

The BTC reimbursed

The question everyone is asking is: what will happen to all the Bitcoin that will be reimbursed to creditors by Mt. Gox?

It should be noted that many fewer will be returned than creditors had at the time of closure, but also that the current value in fiat currency of those that will be returned is higher compared to the fiat currency value at the time of closure of all those that users were found to have on deposit with them. 

Furthermore, more than 10 years have passed, so many of those who were supposed to receive them in the meantime had stopped counting on it. 

Therefore, it is difficult to think that many of those who will receive those refunds will rush to sell Bitcoin at a price that appears low at this moment, and it is therefore imaginable that many of those BTC will be cashed in and not sold in the short term. 

Despite this, the crypto markets have struggled due to fears of the impact of these refunds on the price of BTC.

Bitcoin price predictions: the technical comment on the Mt. Gox effect

According to the chief analyst of Bitget Research, Ryan Lee, the recent underperformance of the crypto market is not only due to the fear of the imminent distribution of Mt. Gox BTC, but also due to the sale of Bitcoin by the German government.

In fact, for a few days now Germany has been selling thousands of BTC seized in the past, and it seems they are doing it directly on the exchanges. 

Generally, the sales of seized assets are conducted through specific auctions, or via OTC, and not on public markets. This time, however, the German authorities seem to have opted for this latter solution, which inevitably had an immediate negative impact on the price. 

According to Lee, however, the macro-monetary policy is still evolving in line with expectations of a rate cut in the USA, with the probabilities of a first rate cut in September rising to 66.5% on the CME. Additionally, the Dollar Index has fallen to around 105 points.

There are also other indicators that could influence the crypto market. 

For example, on the weekly chart Lee points out that Bitcoin is about to reach the lower limit of the Bollinger bands. 

Historically, during bull markets, reaching this level has marked a significant bottom, followed by a consolidation period of 5 to 7 weeks around the lower limit before the start of a new bull trend. In the 2017 bull market, BTC even underwent six corrections greater than 30%.

Furthermore, the current price has fallen below the mining costs for some miners, and this could change their buying and selling behavior of their BTC. According to Lee, miners are now more likely not to sell their BTC, rather than sell them off, and this could reduce the potential selling pressure. 

The expected events in autumn

So in September, or later in November, the Fed should start reducing interest rates, and this could increase liquidity in the markets. 

Furthermore, the presidential elections will be held in the USA, after which the dollar could start to weaken, further aiding Bitcoin. 

If in the short term no positive signals are seen for Bitcoin, already in the medium/short term some timid signals are beginning to be seen that the decline could be destined to stop. 

In the medium term, positive signals should arrive, which should strengthen in the medium/long term. 

The situation is still evolving, but it cannot be ruled out that although the period of suffering might last a little longer, at the end of the tunnel there will be light.