Bitcoin (BTC) failed to keep $20,000 support on Aug. 27 as fears over a sell-off by users of defunct exchange Mt. Gox added to price pressures.
Mt. Gox rumors dismissed as “typical crypto”
Data from TradingView followed BTC/USD as it headed to new six-week lows, reaching $19,766 on Bitstamp.
Thin weekend liquidity appeared to exacerbate already jittery markets, which reacted badly to unconfirmed rumors that Mt. Gox funds were due for release to creditors on Aug. 28.
Claims varied widely at the time of writing, with some believing that a tranche of 137,000 BTC was set for release in one go. Others said that funds would be sent piecemeal, but that payouts would nonetheless begin this weekend.
A point of consensus came in the form of creditors allegedly wanting to sell BTC owed to them, this having been out of reach since 2014, when BTC/USD traded at under $500. The unrealized 40X returns, they feared, would prove too enticing for creditors to become willing hodlers.
Mt. Gox imploded with hundreds of thousands of BTC almost ten years ago. Following a lengthy legal procedure dealing with funds subsequently recovered from the exchange, the appointed rehabilitation trustee, Nobuaki Kobayashi, announced on July 6 that he was “preparing to make repayments” to creditors.
In documentation at the time, Kobayashi gave “the end of August” as a reference period during which some initial payments might begin.
“Following discussions with the Court and in accordance with the Rehabilitation Plan, the Rehabilitation Trustee plans to set the Assignment, etc. Restriction Reference Period from approximately the end of August this year until all or part of the repayments made as initial repayments is completed for safe and secure Repayments,” the documentation read in part.
With no new official information appearing on the dedicated website covering the rehabilitation proceedings, however, it remained unclear as to why the sell-off rumors had gained so much traction so quickly.
Also this is only for those who choose the early lump sum payment which means they only get a portion of their bitcoin. Those who wait until the end of civil rehabilitation period will get more which is years from now.
— Danny Devan (@dannydevan) August 27, 2022
For trader and analyst Josh Rager, meanwhile, even if the full hoard of BTC were sold at once, the resulting selling pressure would not create the kind of apocalyptic event some imagined.
MT GOX release probably creating more fear than needed
140k BTC = $2.8B
BTC daily trade volume $20B to $30B
These BTC aren’t going to be all sold at once https://t.co/ZLBh0HVIgs
— Rager (@Rager) August 27, 2022
“The fear around the release of, potentially, the Mt. Gox Bitcoins is just unwarranted,” Cointelegraph contributor Michaël van de Poppe said, adding:
Profits get squeezed in weekend volatility
The latest losses nonetheless triggered more pain for existing BTC hodlers.
According to data from on-chain analytics firm Glassnode, the percentage of the overall BTC supply in profit hit a one-month low on the day at just above 55%.
Older coins continued a trend of increasing dormancy, meanwhile, with the percentage of the supply last leaving its wallet two years ago or longer hitting ten-month highs.
Hodler habits remaining broadly unchanged despite the 2022 crypto market drawdown.