BTC fell below $59,000 in the short term. The market may have "overreacted" to the selling pressure of Mt.Gox

Original title: "BTC short-term fell below $59,000, the market may have "overreacted" to the selling pressure on Mt.Gox"

Original source: Mary Liu, BitpushNews

The crypto market is facing huge selling pressure after the trustee of the Mt.Gox bankruptcy property announced that it will begin returning Bitcoin (BTC) and Bitcoin Cash (BCH) to creditors in July.

More than 140,000 BTC and BCH will be distributed to creditors. Affected by this news, Bitcoin once fell below $59,000 during the session. As of press time, the trading price rebounded to $59,962, a 24-hour drop of nearly 6%.

Altcoins followed Bitcoin's decline, with the top 200 tokens falling more than rising.

Among the rising currencies, Mog Coin (MOG) led the gains, up 16.4%, followed by Lido DAO (LIDO) up 8.2%, and UNUS SED LEO (LEO) up 6.4%. ORDI (ORDI) led the decline, down 14%, Echelon Prime (PRIME) down 11.8%, and Uniswap down 11.7%.

The current overall market value of cryptocurrencies is $2.21 trillion, with Bitcoin's market share at 53.2%.

Mt.Gox sell-off may be smaller than expected

The decade-long Mt. Gox repayment event is a major event in the cryptocurrency space. Mt. Gox was hacked in 2014, and more than 940,000 bitcoins were stolen from more than 127,000 accounts. The exchange subsequently filed for bankruptcy, and creditors were unable to recover their funds in full until the bankruptcy case entered legal proceedings.

In May this year, the exchange transferred 141,686 bitcoins (worth $9.62 billion) to a new wallet "1Jbez", causing a market sensation and a brief panic. Some industry insiders warned that a large-scale market sell-off was imminent because it was the first time that funds from Mt. Gox-related cold wallets had been transferred on-chain in more than five years.

Repayment trustee Nobuaki Kobayashi pointed out in the latest statement that Mt. Gox has invested extra time and due diligence "to ensure safe and reliable repayment to creditors, including technical remedies for safe repayment, compliance with financial regulations of various countries, and discussions with cryptocurrency exchanges on repayment arrangements."

The statement called on creditors to remain patient and said the speed of repayment would depend on the repayment method chosen, which would include coordination with other cryptocurrency exchanges.

Some experts noted that the selling pressure from Mt. Gox may be less than expected.

The expected volume of sales after the Mt. Gox bitcoins hit the market will be lower than suggested by headlines, said Alex Thorn, head of research at Galaxy Research, who said only 65,000 bitcoins will be distributed to individual investors.

Alex Thorn said on the X platform: "In order to obtain immediate compensation (so-called early compensation), creditors accepted a reduction of about 10% (10% is not needed). We believe that about 75% of BTC is used for this option, leaving about 95,000 tokens for early compensation, of which about 20,000 tokens belong to the claims fund and about 10,000 tokens belong to Bitcoinica BK, leaving about 65,000 tokens for individual creditors. 65,000 BTC/BCH is far lower than the 141,868 claimed by the media."

For the claims funds, Thorn said that the vast majority of partners in these funds are high-net-worth Bitcoin holders, not arbitrageurs seeking quick profit transactions.

He concluded: "So I think the number of tokens distributed is lower than the market expects, and I think once these tokens are distributed, BCH will perform worse than BTC, and a large part will be sold by creditors into less liquid markets."

Some analysts and early crypto investors who have been involved in Mt. Gox since its inception also said that despite the announcement by the Mt. Gox trustee, repayments may still face further delays, as the exchange was once scheduled to begin repayments in October 2023, but announced a postponement in September 2023.

Crypto trader Pat believes that FUD and pullbacks related to Mt. Gox are nothing new to the crypto market, as similar pullbacks occurred in the past three times when the incident made headlines, but Bitcoin eventually moved higher.

Latest bout of weakness may ‘resolve itself’

Bitfinex analysts said the cryptocurrency market is currently “in a state of limbo as higher timeframe lows are approaching on the daily, weekly and monthly charts, while there is also a downtrend on the lower timeframes (one-minute to 15-minute charts).”

They also noted that outflows from U.S.-listed spot Bitcoin ETFs “exacerbated negative sentiment, with outflows totaling $544.1 million last week, although this was related to basis/profit taking and not necessarily true sentiment around BTC.”

Bitfinex analysts said: “As mentioned previously, large ETF sell-offs are often associated with local bottoms in BTC price and, therefore, a decline in total cryptocurrency market capitalization. Historically, moves of this magnitude have often signaled at least local lows, as was the case on June 11, when a similar intra-week decline led to the formation of a new local price floor. As such, potential buying opportunities exist and these large declines warrant close attention by traders.”

Bitfinex concluded: “However, we believe the market is in wait-and-see mode, with the short term seeing either continued pressure from excess BTC selling and a lack of any catalyst to drive prices higher; or a move to an ETH ETF that could potentially buy higher.” Brian Dixon, CEO of Off the Chain Capital, said what crypto investors really need is patience and waiting for the latest bout of weakness to "work itself out."

Dixon said in a report: "Historically, even in bull markets, Bitcoin has fallen 4-5 times a year, with a drop of 20-30%, so in my opinion, this correction is nothing to worry about. In the 2017 bull market, Bitcoin fell 20-30% as many as 10 times, but still set a record high. In the 2020-2021 bull market, Bitcoin fell 20-30% 4 times, but still set a record high."

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