1 July 2024
Defunct Bitcoin exchange Mt. Gox has finally announced the final date to begin refunding Bitcoin and Bitcoin Cash (BCH) to affected customers, starting as early as this week.
This eagerly awaited announcement has raised concerns within the cryptocurrency community regarding the potential contribution of these customers to ongoing selling pressure in the Bitcoin market.
Experts Confident In Absorbing Potential Mt. Gox Sell-Off
While some analysts express apprehensions about potential losses in Bitcoin, they generally agree that any sell-off concerns related to Mt. Gox will likely be contained and short-lived.
Lennix Lai, chief commercial officer (CCO) of crypto exchange OKX, believes that many of Mt. Gox’s early users and creditors are long-term Bitcoin enthusiasts who are less likely to sell their entire Bitcoin holdings immediately.
Drawing comparisons to previous sell-offs related to law enforcement actions, such as the Silk Road case, Lai highlights that they did not result in sustained catastrophic price drops.
Experts, including Jacob Joseph, a research analyst at CCData, suggest that the markets have sufficient liquidity to absorb any possible mass-market sell-off.
Joseph explains that many of Mt. Gox’s creditors may opt to receive early repayment by accepting a 10% reduction on their holdings, which would reduce the overall selling pressure.
Recent price movements indicate that the temporary impact of Mt. Gox repayments may already be factored into the market, further supporting the view that the potential selling pressure could be mitigated.
Varied Recipients And Time Element
Alex Thorn, head of research at Galaxy Digital, believes that fewer coins will be distributed than anticipated, resulting in less sell pressure than expected.
However, Thorn acknowledges that even if only 10% of the distributed Bitcoin is sold, it could still have a market impact. Thorn points out that most individual creditors deposit their coins directly into trading accounts, making them easily sellable.
Vijay Ayyar, head of consumer growth for Asia-Pacific at crypto exchange Gemini, suggests that the overall impact of the Mt. Gox disbursement is likely to be dissipated due to the varied recipients of the funds.
Individual holders will receive their Bitcoin immediately, while a significant amount will be disbursed to claims funds, which will then be distributed to their limited partners. Ayyar mentions that this process could take time, adding a time element to the impact on price.
Bitcoin Price Predictions For July
As the cryptocurrency market enters the month of July, analysts are offering insights into Bitcoin’s price prospects based on historical trends and technical analysis.
Notably, Ali Martinez suggests that Bitcoin has historically exhibited a strong rebound in July following a negative performance in June. Martinez highlights that during this month, Bitcoin has shown an average return of 7.98% and a median return of 9.60%.
Martinez also emphasizes that Bitcoin currently demonstrates robust support at $61,100, which could serve as a crucial level for price stability. On the other hand, the analyst identifies $64,050 and $66,250 as the most important resistance areas.
Breaking through these resistance levels is pivotal for Bitcoin’s potential to retest its all-time high of $73,700 in March of this year.
Supporting this view, another technical analyst, Rekt Capital, suggests that Bitcoin exhibits favorable price action to form a cluster at the Range Low of $60,600. This clustering effect, according to the analyst, could develop throughout July.
This cluster formation aims to prepare for a potential rally back to the Range High at $71,500.
When writing, the largest cryptocurrency on the market trades at $62,630, up 2% in the 24-hour time frame.
Featured image from DALL-E, chart from TradingView.com