Bitcoin (BTC) failed to hold $20,000 support on Aug. 27 as fears of a user sell-off of defunct exchange Mt. Gox added to price pressures.
BTC/USD 1-Day Candlestick Chart (Bitstamp). Source: TradingView
Mt. Gox rumors dismissed as ‘typical crypto’
Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it headed for new six-week lows, hitting $19,766 on Bitstamp.
Thin weekend liquidity appeared to exacerbate already jittery markets, which reacted poorly to unconfirmed rumors that Mt. Gox funds would be released to creditors on Aug. 28.
Claims have varied widely at the time of writing, with some believing that a 137,000 BTC tranche was to be released at once. Others said the funds were being sent out in chunks, but that withdrawals would still start this weekend.
One point of consensus came in the form of creditors allegedly looking to sell BTC owed to them, which has been out of reach since 2014 when BTC/USD was trading below $500. The 40x unrealized returns, they feared, would prove too tempting for creditors to become compliant hodlers.
Mt. Gox imploded with hundreds of thousands of bitcoins nearly ten years ago. After a protracted court case over funds later recovered from the exchange, appointed rehabilitation trustee Nobuaki Kobayashi announced on July 6 that he was preparing “repayments” to creditors.
In the documentation at the time, Kobayashi gave “late August” as the reference period when some initial payments could begin.
“Following discussions with the court and in accordance with the rehabilitation plan, the rehabilitation trustee plans to set the reference period for the assignment etc. from approximately late August this year until all or part of the repayments made as initial repayments are completed with safe and secure repayments,” it read a part of it.
However, with no new official information appearing on the dedicated website on the rehabilitation process, it remained unclear why the sales rumors had gained so much traction so quickly.
Again, this only applies to those who opt for the early lump sum payment, meaning they only receive a portion of their bitcoins. Anyone who waits until the end of the civil rehabilitation period will get more in a few years.
— Danny Devan (@dannydevan) August 27, 2022
For trader and analyst Josh Rager, even if the entire hoard of BTC were sold at once, the resulting selling pressure would not create the kind of apocalyptic event that some have imagined.
The release of MT GOX probably generates more fear than necessary
140,000 BTC = $2.8 billion
Daily BTC trading volume of $20-$30 billion
These BTC are not sold all at once https://t.co/ZLBh0HVIgs
— Rager (@Rager) August 27, 2022
“The fears surrounding the potential release of the Mt. Gox bitcoins are simply unfounded,” added Cointelegraph contributor Michaël van de Poppe.
“Typical crypto.”
Profits are pressured by weekend volatility
However, the recent losses triggered more pain from existing BTC hodlers.
Related: US stocks lose $1.25 trillion in one day — more than the entire crypto market cap
According to data from on-chain analytics firm Glassnode, total BTC supply percentage of profit hit a monthly low of just over 55% on the day.
Legacy coins, meanwhile, continued the trend of increasing calm, with the percentage of supply that last left its wallet two years or more ago hitting 10-month highs.
Cointelegraph recently reported that despite the crypto market’s decline in 2022, hodler habits have remained largely unchanged.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
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