Bitcoin
Mt. Gox is a “thorn in Bitcoin’s side,” says analyst
Bitcoin has struggled amid the recent Mt. Gox payouts and market trends, but the bearish behavior should not be interpreted as unfavorable.
Last week, Bitcoin (BTC) concluded the week at approximately $55,850, marking an 11% drop from the previous week’s closing price of $62,775. The week saw a significant selling pressurewith BTC falling to $53,500 on Thursday before recovering to $58,250 and finally settling at $55,850.
BTC Spot ETFs have seen $238 million in net inflows during the crisis. The cumulative trading volume since inception is around $315 billion, showing a decline in trading activity. This is in line with typical market behavior, as Q3 usually witnesses lower trading activity.
“This data should not be seen negatively, but rather as a seasonal trend, especially among traditional financial investors,” noted Matteo Greco, research analyst at Fineqia International.
Interestingly, the decline showed no correlation with BTC Spot ETF flows, a deviation from historical patterns where ETF flows have significantly influenced price movements.
“However, for the first time since its inception, there is a noticeable decoupling between price action and capital flows, indicating that recent price behavior has been driven primarily by trading activity within the crypto-native space,” Greco added.
Mount Gox
The high sales pressure in the chain is due, in part, to the start of the long-awaited Mount Gox refunds.
Founded in 2010, Mt. Gox quickly became the world’s largest Bitcoin exchange. Its success was short-lived, as it abruptly ceased trading, closed its website, and filed for bankruptcy protection in early 2014, revealing the loss of approximately 850,000 BTC, worth around $450 million at the time, due to thefts from its hot wallets over several years, starting in late 2011.
The official confirmation of the refunds, marked by the movement of 47,228 BTC from a cold wallet associated with Mt. Gox, triggered market reactions. Furthermore, after a recent halving which reduced mining rewards by 50%, selling pressure from miners continues to affect prices, although it has eased recently.
The recent drawdown has notably reduced unrealized profits, driven by long-term holders selling their coins. The MVRV ratio now stands at around 1.5, indicating an average unrealized profit of 50% among market participants, down from over 200% in March.
“This trend suggests that the recent price action was primarily due to long-term holders taking profits and selling their coins to new buyers at higher purchase prices,” Greco added.