Mt. Gox Redemptions Unlikely to Impact Bitcoin (BTC) Price, But Could Be Bearish for Bitcoin Cash (BCH)

Concerns that the Mt. Gox bankruptcy redemptions will drive down the price of Bitcoin (BTC) are largely unfounded, according to Presto Labs’ Head of Research.

Bitcoin (BTC) price is still facing selling pressure, with over $200 million in liquidations having occurred as Thursday’s trading day began in Asia, CoinDesk reported.

The former exchange is set to return approximately $9.5 billion in BTC to its customers. Additionally, it will also distribute 143,000 BCH, valued around $73 million at the time of writing.

With Bitcoin Cash's daily trading volume at $308.8 million, this redemption constitutes roughly 24% of its daily trading volume, according to CoinGecko data.

"Our analysis shows that the selling pressure for BCH will be four times larger than for BTC: 24% of the daily trading value for BCH vs. 6% of the daily trading value for BTC," Peter Chung of Presto Labs pointed out. Chung noted that BCH's daily trading value is only 1/50th of BTC’s.

Speaking to CoinDesk, Chung explained that Bitcoin is expected to experience limited selling because those who wished to exit had already sold their claims on bankruptcy claim markets.

"Weak-handed creditors had plenty of chances to exit over the last ten years on the back of aggressive bidding from the claim funds, so we can safely assume the current group of creditors consists of diamond-handed BTC bulls," Chung said.

Chung suggests that creditors are likely to treat BCH as an "airdrop" and sell it immediately because Bitcoin Cash's fork occurred three years after Mt. Gox’s bankruptcy. "Creditors are oblivious to BCH’s cause," he continued.

Chung went on to recommend a market-neutral trade to handle this situation: "Long BTC perpetuals paired with short BCH perpetuals is the most efficient way to express this view, barring funding rate risk." Those looking to secure a funding rate could explore other approaches, such as shorting term futures or borrowing BCH in the spot market, he added.

BCH is currently trading at $360, down 3.8%, according to CoinDesk Indices data. The looming Mt. Gox redemptions and the potential selling pressure are key factors influencing its current performance.

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