Markets
Gox About to Unload $9 Billion in Bitcoin – What This Means for BTC
Omer Taha Satin | Anadolu | Getty Images
A Bitcoin The exchange that collapsed 10 years ago after being hacked must return billions of dollars in tokens to users — and that has investors worried.
In a few days, bankrupt Tokyo-based bitcoin exchange Mt. Gox will begin paying back nearly $9 billion in tokens to thousands of users. The platform went bankrupt in 2014 after a series of robberies which cost in the range of 650,000 for 950,000 bitcoin, or more than $58 billion at current prices.
The payment follows a protracted bankruptcy process that involved numerous delays and legal challenges.
On Monday, the court-appointed administrator overseeing the exchange’s bankruptcy proceedings he said distributions to the company’s roughly 20,000 creditors would begin in early July. Disbursements will be made in a mix of bitcoin and bitcoin cash, an early fork of the original cryptocurrency.
While this is good news for hack victims who have spent years waiting to be cured, bitcoin price fell to $59,000 last week in the cryptocurrency market second worst weekly decline Of the year.
CNBC spoke to half a dozen analysts to get their take on what to expect when about 141,000 bitcoins — or roughly 0.7% of the total 19.7 million bitcoins in circulation — are returned to Mt. Gox victims this week.
Pressure on Bitcoin May Increase
Gox — short for “Magic: The Gathering Online Exchange” — was once the world’s largest spot bitcoin exchange, claiming to handle around 80% of all global dollar-for-bitcoin trades.
When it closed in February 2014, bitcoin was worth about US$ 600.
Today, the world’s largest cryptocurrency trades at around $61,000 per coin. This means that users who chose to be reimbursed in kind – that is, in the cryptocurrency itself, rather than the cash equivalent – have seen the value of their coins rise by more than 10,000% over the last decade.
John Glover, chief investment officer at cryptocurrency lending firm Ledn, told CNBC that the windfall for Mt. Gox users would likely translate into large bitcoin selloffs as investors look to lock in gains.
“Many will clearly cash out and take advantage of the fact that having their assets trapped in the Mt. Gox bankruptcy was the best investment they ever made,” said Glover, who was previously a managing director at Barclays. “Some will clearly choose to take the money and run,” Glover added.
James Butterfill, head of research at CoinShares, told CNBC that the glut of nearly $9 billion worth of bitcoin to be released “has long been a concern for those with bullish views on bitcoin.”
“Consequently, the market is highly sensitive to any related news. With the announcement that the Trust will begin selling in July, investors are understandably concerned,” Butterfill said.
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It wouldn’t be the first time bitcoin has moved in reaction to large redemptions of funds locked in centralized trading platforms.
Last month, cryptocurrency exchange Gemini returned more than $2 billion in bitcoins to users with funds that were trapped in its Earn lending program, marking a 230% recovery after bitcoin prices more than tripled since the Gemini suspended Earn withdrawals on November 16th.
Analysts at JPMorgan attributed this to negative price action, saying in a research note last week that “it is fair to assume that some of Gemini’s lenders, which are primarily retail clients, have taken at least partial profits in recent weeks.”
Similarly, JPMorgan analysts expect Mt. Gox customers to be similarly inclined to sell some of their bitcoins to cash in on the cryptocurrency’s seismic gains.
“Assuming the majority of settlements by Mt. Gox’s creditors occur in July, [this] creates a trajectory where cryptocurrency prices come under more pressure in July but start to recover from August onwards,” they wrote.
Separately, last month, the German government sold 5,000 — valued at roughly $305.8 million at Thursday prices — of a pile of 50,000 bitcoins seized in connection with the Movi2k movie piracy operation.
The funds were sent to several cryptocurrency exchanges, including Coinbase, Kraken and Bitstamp, according to blockchain intelligence firm Arkham Intelligence.
Analysts say these cryptocurrency sell-offs have also put pressure on the price of bitcoin.
Mt. Gox customers are expected to keep their bitcoins
Most analysts agree that bitcoin’s losses are likely to be contained and short-lived.
“I believe the Mt. Gox sell-off concerns are likely to be short-term,” said Lennix Lai, chief commercial officer at cryptocurrency exchange OKX.
“Many of the early adopters of Mt. Gox, as well as lenders, are long-time bitcoin enthusiasts who are less likely to sell all their bitcoins immediately,” he said, adding that previous sales by law enforcement agencies, including the Silk Road casedid not result in a catastrophic and sustained fall in prices.
Butterfill suggested there is enough market liquidity to cushion the blow from any potential mass-market selling action.
“Bitcoin has maintained a daily trading volume of $8.74 billion on reputable exchanges this year, suggesting that liquidity is sufficient to absorb these sales during the summer months,” said Butterfill.
According to CCData research analyst Jacob Joseph, markets are more than capable of absorbing the selling pressure.
“Additionally, a healthy portion of creditors will likely take a 10% reduction in their holdings to receive early repayment, and not all holdings will be liquidated in the open market, reducing overall selling pressure,” he said.
Recent price movements suggest the temporary impact of Mt. Gox refunds may already be priced in, Joseph added.
Galaxy Digital’s head of research, Alex Thorn, believes that fewer coins will be distributed than people think, meaning there will be less selling pressure than the market expects.
However, he also wrote in May that even if only 10% of the distributed bitcoin is sold, “it will have an impact on the market.”
“Most individual lenders will have their coins deposited directly into a trading account on an exchange, making it extremely easy to sell,” Thorn said.
Vijay Ayyar, head of consumer growth for Asia-Pacific at cryptocurrency exchange Gemini, said the overall impact of the Mt. Gox disbursement is likely to be “dissipated” as the recipients of the funds are varied.
On the one hand, there are individual holders who will receive their bitcoin immediately. Then there is the “significant amount” of bitcoin that will be disbursed to claims funds, Ayyar said.
“These funds would then need to distribute them to their LPs [limited partners]so the whole process could take a while, adding an element of time to the price impact,” he told CNBC.
Macro Headwinds Behind Bitcoin’s Slump
It is important to note that there are many other reasons behind bitcoin’s recent declines.
The cryptocurrency made an impressive recovery earlier this year, rising above $70,000 shortly after the approval of the first spot bitcoin ETF by the US Securities and Exchange Commission.
Stock chart iconStock chart icon
Bitcoin price performance in US dollars, year-to-date.
But investors remained anxious amid bitcoin ETF outflows and sizable market sell-offs. The broader macro environment also has investors concerned.
Earlier this month, the Federal Reserve suggested it plans to cut rates just once this year, down from the multiple cuts previously indicated.
Cryptocurrencies, which are inherently volatile, are particularly sensitive to changes in the interest rate environment.
CoinShares’ Butterfill said the Fed’s new rate forecast was among “the likely culprits for the recent price decline” of bitcoin.
This, along with other issues, “will likely weigh on prices in the lower volume summer months,” Butterfill said. However, “the fundamental investment picture remains largely intact,” she added.
This week saw $722 million worth of Bitcoin spot ETF inflows, including the largest daily inflow in a month.
Cryptocurrency markets rallied on Wednesday, driven by inflows into spot Bitcoin exchange-traded funds (ETFs).
The price of Bitcoin (BTC) is up 3% over the past 24 hours to last change hands at $65,200, according to CoinGecko. Ethereum (ETH) is up 2% and is trading at $3,471. Solana (SUN) and Polkadot (POINT) increased by 4%.
Bitcoin spot ETFs saw $422 million in daily inflows on Tuesday, the highest in the past 30 days, according to Far side data, . The all-time record for a single day was $1.05 billion on March 12.
Among Tuesday’s top contributors, BlackRock’s IBIT led with $260 million in inflows, followed by Fidelity’s FBTC with $61 million. This week has already seen more than $722 million in inflows.
Among the top 100 cryptocurrencies by market cap, Worldcoin (WLD) led with a 28% increase, followed by Helium (HNT) with 20% and Lido DAO (LDO) with 15%.
Worldcoin, a decentralized identity project led by OpenAI CEO Sam Altman, announced is extending the lockups for early investors and team members. This means that tokens will be gradually released through 2029, instead of the original 2027 plan. Token unlocks are generally seen as a negative because they increase supply and early investors can sell their tokens for profit.
Meanwhile, XRP, the token of the XRP Ledger network, jumped 8% after the CME and CF benchmarks introduced new indices and reference rates for XRP.
U.S. stocks faced a downturn on Wednesday. The S&P 500 fell 1%, while the Nasdaq Composite and Dow Jones Industrial Average both fell 2%.
Markets
Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days
Crypto markets appear to have been taken over by the bulls as major tokens have surged above their crucial resistance zone. Bitcoin surged above $65,000 while Ethereum was above $3,500, and XRP, which had remained passive for quite some time, surged over 40% in the past few days to hit $0.6. The uptrend has been captured in most altcoins, with Worldcoin (WLD), Arweave (AR), and Injective (INJ) leading the rally. Here’s what to expect for these tokens in the coming days.
Worldcoin (WLD) Price Analysis
O Worldcoin Price has been trading inside a descending wedge since it marked a new ATH near $12 in the final days of Q1 2024. The recent price action helped the price break out of the upper resistance of the wedge, breaking above the crucial resistance zone between $2.21 and $2.39. Market sentiments have changed, but technicals suggest that the bulls may remain passive for a while, which could offer some room for a bearish pullback.
The price broke out of the wedge with a significant increase in volume, but the current volume suggests that the bulls have taken a step back. Meanwhile, the RSI is about to reach the upper boundary, which could attract bearish forces. Additionally, the DMI has undergone a bullish crossover, but the decline in the ADX suggests that the rally may remain consolidated above the gains. Therefore, the WLD price is expected to maintain a horizontal consolidation between $3 and $3.3 and trigger a fresh rally to $4.4 during the next bullish rally.
Arweave (AR) Price Analysis
Arweave formed a strong base around $25, which helped the rally trigger a recovery during the bearish attack. Mt. Gox and German terror forced the price to fall below $20. However, the recent price action has brought the altcoin within the bullish range and raised expectations of maintaining a decent uptrend for a few more days.
AR price has hit one of the major resistances around $30 to $31.5, which could act as a strong base once overcome. The buying volume is slowly increasing, which could keep the bullish hopes for the rally high. Moreover, the supertrend has just flashed a buy signal, indicating a clean reversal of the trend. Therefore, AR price seems primed to maintain a healthy uptrend and rally above $40. However, if the bulls maintain a similar trend, making new highs above $50 may not be a tedious task for the bulls.
Price Analysis of Injective (INJ)
Injective price has been showing sharp strength since the beginning of the year and hence, the recent turnaround is expected to revive a good uptrend going forward. The bears engulfed the rally to a large extent, but the recent price action suggests that the bulls have regained their dominance. Therefore, INJ price is expected to maintain a strong uptrend with a bearish interference on the way down.
INJ price has surged above the lower support zone and has registered consecutive bullish candles. Although the volume is below the required levels, the OBV is maintaining a sharp uptrend. Furthermore, the Ichimoku cloud lead span B is heading towards the lead span A and a healthy crossover indicates the start of a new uptrend. However, INJ price may be out of the bears’ reach once it secures the resistance zone between $30.77 and $32.12, which seems to be on the horizon.
Ethereum (ETH) supply on exchanges has hit a 34-month high as the asset’s price surpassed the $3,500 mark.
ETH has risen 2.3% over the past 24 hours and is trading at $3,490 at the time of writing. The second-largest cryptocurrency — with a market cap of $419 billion — briefly touched an intraday high of $3,517 earlier today.
ETH Price, Whale Activity, RSI, and Exchange Supply – July 17 | Source: Santiment
Ethereum’s daily trading volume also increased by 7.6% to reach $19.8 billion.
According to data provided by Santiment, the supply of Ethereum on exchanges has reached $19.52 million ETH. This level was last seen in September 2021, when the asset was trading around the same price.
On the other hand, data from the market intelligence platform shows that the number of whale transactions has fallen by 12% in the last day — falling from 8,730 to 7,629 unique transactions per day.
The move shows that the supply of Ethereum on exchanges has been increasing with small deposits rather than large transactions from whales.
Additionally, the ETH Relative Strength Index (RSI) is currently hovering at the 60-mark, per Santiment. The indicator shows that Ethereum is slightly overbought at this price point, but it may not be in a critical position due to its large market cap.
One of the main drivers of Ethereum price increase is ETH spot expectations ETFs in the US Investment products are scheduled to start trading on July 23rd.
Markets
Bits + Beeps: How to Play the ‘Trump Trade’ in Cryptocurrencies After the Assassination Attempt
Also, how much will the Fed cut rates (and when)? What will be the inflows into ETH ETFs? And what is the near future for Bitcoin?
Posted on July 17, 2024 at 12:00 PM EST.
Listen to the episode at Apple Podcasts, Spotify, Capsules, Source, Podcast Addict, Pocket molds, Amazon Musicor on your favorite podcast platform.
In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger and Joe McCann, joined by guest Jack Platts, dive into the market reaction to the recent assassination attempt on former President Donald Trump, analyzing how this event will influence the 2024 US presidential election and the cryptocurrency markets.
They also cover potential rate cuts: Could there be a cut in July? How big could the September rate cut be? Could the decision be influenced by the upcoming election?
They also give their predictions on what percentage of BTC ETF inflows the ETH ETFs will reach, and James talks about what he expects for Grayscale’s ETHE (hint: his outlook would be positive for ETH).
Finally, they delve into what’s next for Bitcoin as the German government runs out of BTC and Mt. Gox distributions begin. Just now?
Program Highlights:
- Whether Trump’s shooting decided the election and whether the event caused a “flight to safety”
- How election markets are becoming a place to watch election probabilities and whether cryptocurrencies “lean right”
- Whether rate cuts will occur in July or September and by how much they will cut: 25 bps or 50 bps
- How Joe sees the relationship between global liquidity cycles, rate cuts, and the potential rise of Bitcoin
- What are the new updates about Ethereum ETFs and their expected launch?
- Why Solana Hasn’t Performed Significantly Better Since Trump News
- What Market Breadth Indicates About the Current Market Rally and the Impact of Rates on Small Caps
- Everyone’s predictions on ETH ETF inflows and how much outflow we’ll see on Grayscale’s ETHE
- What’s Next for BTC After German Government Exits Bitcoin and Mt. Gox Giveaways Starting This Week
Hosts:
Guest:
- Jack PlattsCo-Founder and Managing Partner of Hypersphere Ventures
“You Only Need 0.02 BTC to Retire Forever – Here’s Why” – Willy Woo
Inside the Banana Zone: The Cryptocurrency Trend Everyone’s Talking About – Raoul Pal
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“Many Bitcoin Investors Will Be Multimillionaires Before 2030” – Michael Saylor
Raoul Pal – “This is a huge achievement! This is where I see Bitcoin and cryptocurrencies by 2030”
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Inside the Banana Zone: The Cryptocurrency Trend Everyone’s Talking About – Raoul Pal
DIGITAL BLOCK! You Live in a Virtual Prison Without Knowing It: The 2025 WARNING by Whitney Webb
“Many Bitcoin Investors Will Be Multimillionaires Before 2030” – Michael Saylor
Raoul Pal – “This is a huge achievement! This is where I see Bitcoin and cryptocurrencies by 2030”
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