Zabi
Despite large Bitcoin (BTC) sales by the German government and Mt. Gox creditors, experts estimate the market can absorb them with a potential -10.5% impact.
Recent analyses by economist Alex Krüger and Ki Young Ju, founder and CEO of CryptoQuant, suggest that the Bitcoin market can endure significant sell-offs by the German government and Mt. Gox creditors, with an estimated potential impact of -10.5%.
Great analysis from a macro perspective.
Despite potential liquidity dumps from the German govt and Mt. Gox creditors, #Bitcoin market can absorb it with an estimated -10.5% impact. Say $47-48K level.
Mt. Gox and govt BTC selling won’t end this cycle.
— Ki Young Ju (@ki_young_ju) July 8, 2024
Young Ju’s prediction is based on the assumption that Germany will sell its remaining 23,788 BTC, and Mt. Gox creditors will sell 25,500 BTC in one go. This impact, he argues, is absorbable by the market, which would then stabilize around the $47,000 to $48,000 price range.
A commenter on Young Ju’s post, however, expressed concerns about the impact on retail investors. They argue that a 10% drop could trigger further shorting by hedge funds, delaying price recovery until Wall Street hedge funds take long positions.
German Government Bitcoin Sales
Alex Krüger pointed out that, the German police, which held 50,000 BTC until late June, has been selling these assets in small increments since June 19. On a recent occasion, they moved 16,038 BTC, worth $910 million, to brokers and exchanges.
This large transaction resulted in a 3.5% price drop, around $2,000 per BTC. Despite these sales, Ki Young Ju believes the market can absorb the remaining German BTC in one scoop, mitigating long-term damage.
Per data from Arkham, the German government currently holds 27,461 BTC valued at approximately $1.57 billion.
Mt. Gox Bitcoin Distributions
Meanwhile, Mt. Gox, the infamous exchange that collapsed in 2014, holds 138,985 BTC, worth about $7.96 billion.
They recently began repaying creditors, with 95,000 BTC scheduled for distribution within 90 days. Of this, 20,000 BTC will go to credit funds, 10,000 BTC to a New Zealand exchange, and 65,000 BTC to individual creditors.
However, the NZ exchange would not be able to sell off its 10,000 BTC due to ongoing bankruptcy proceedings. Now, assuming 30% of the remaining 85,000 BTC gets sold, this equals 25,500 BTC.
On July 8, Ki Young Ju reported a movement of 47,000 BTC from Mt. Gox, which did not impact the market price significantly. Potential scenarios for this movement include internal transfers for security, OTC deals to avoid market disruption or brokerage services settled post-sale. Additionally, 1,500 BTC moved to Bitbank without a significant surge in trading volume, suggesting minimal market impact.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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