Bitcoin (BTC) Price Decline on Germany, Mt. Gox and Miner Sell Pressure May Be Overblown: NYDIG

Recent blockchain movements sparked "irrational" fears, offering a buying opportunity for investors, NYDIG's Greg Cipolaro said.

Recent blockchain movements sparked “irrational” fears, offering a buying opportunity for investors, NYDIG's Greg Cipolaro said.

Bitcoin (BTC) has plunged 15% over the past month as market observers point to selling pressure from bitcoin mining operators, Mt. Gox refunds and, most recently, the German state of Saxony as the main catalysts for the price decline.

However, the case for the above has been overstated, Greg Cipolaro, research head at NYDIG, said in a Wednesday note.

“While emotions and psychology may rule over the short-term, our analysis suggests that the price impact from potential selling may be overblown,” Cipolaro wrote.

“We aren’t oblivious to the fact that other factors may be at play here, but it is reasonable to think that the rational investor may find this an interesting opportunity created by irrational fears,” he added.

Over the past weeks, investors have been fixated on transfers related to Bitcoin addresses linked to the estate of defunct exchange Mt. Gox, the U.S. government and the German state of Saxony, sparking fears about imminent sales of the over $20 billion in crypto stash these three entities held combined.

Even if all three were to sell all their assets – roughly 375,000 BTC as of June 9 – at once, Cipolaro found that BTC's price decline over the past weeks was deeper than it would have been for stocks based on Bloomberg's transaction cost analysis (TCA) – a well-followed indicator long used in traditional markets for estimating the price impact of block sales of common stocks.

Cipolaro also went on to argue that recent reports about miners capitulating and selling their BTC stash en masse after this year's halving event have not just been overstated, but in some cases wholly inaccurate.

NYDIG's data showed that publicly listed mining companies actually increased their bitcoin holdings in June. And while the amount of BTC sold picked up slightly last month, it was still well below levels seen earlier this year and last year.

Cipolaro advised against relying on blockchain data about miners moving assets without knowing the nature of those transactions. “Identifying that bitcoins move to an exchange or OTC desk, even if done correctly, only tells us that coins moved. That’s it,” he said. “They could’ve been posted as collateral or lent out, not necessarily sold.”

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Krisztian Sandor is a reporter on the U.S. markets team focusing on stablecoins and institutional investment. He holds BTC and ETH.

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