Opinion: Market overestimates selling pressure from Mt. Gox Bitcoin recipients

Translation: Vernacular Blockchain

While the massive transfer of Bitcoin has sparked fears of a sell-off, experts say the impact may not be that severe.

The long-awaited repayment of Mt. Gox is underway, and while some Bitcoin investors are worried about the possibility of a massive sell-off that could cause prices to drop, early signs suggest users are leaning toward holding on to the coins they have recovered.

Kraken, one of the trading platforms that handles repayments, has seen a significant increase in Bitcoin withdrawals, according to CryptoQuant data. In the past 24 hours, more than 5,000 Bitcoins (approximately $329 million) were withdrawn.

Many recipients did not cash out immediately, but transferred the recovered assets to self-custodial wallets to continue holding them.

"Users are withdrawing and transferring Bitcoin from exchanges to secure cold wallets, a behavior that demonstrates their increasing focus on the safety and security of asset custody," Sharat Chandra, founder of EmpowerEdge Ventures, told Decrypt.

He added that while some selling pressure cannot be ruled out, long-term holders may continue to accumulate Bitcoin, which may mitigate large price drops.

Even so, so many Bitcoins are flowing, which is bound to have some impact on the market.

Arkham Intelligence reports that representatives of Mt. Gox moved 32,371 Bitcoin (approximately $2.13 billion) to an unmarked address yesterday, followed by smaller transfers to Bitstamp and another unmarked address. The transfers are part of the exchange's repayment plan, where funds are spread across multiple platforms before being distributed to users.

Blockchain Governance Council founder Raj A. Kapoor told Decrypt that the repayment had some impact on Bitcoin prices, but the leading cryptocurrency “quickly settled into a strong support range.”

As of this writing, the price of Bitcoin is $66,775, according to CoinGecko. Kapoor believes that key support for Bitcoin lies between $63,000 and $65,000, with technical indicators suggesting a rebound to around $67,000 is possible.

Despite initial concerns about potential selling pressure, many experts believe the market will be able to absorb the influx of Bitcoin without major turmoil.

Eneko Knörr, CEO of stablecoin issuing company Stabolut, noted that these repayments will be distributed in multiple batches across major trading platforms, which helps mitigate immediate risks.

Knörr added that the German government’s recent sale of nearly $3 billion in Bitcoin did not result in a significant price drop, indicating that the market is able to absorb such transactions without major turmoil.

“Based on this precedent, the impact of Mt. Gox is unlikely to have a significant impact on Bitcoin prices,” he said.

Marko Jurina, CEO of multi-chain trading platform Jumper, provides a broader view on current market conditions.

“The market has been range-bound since March, which suggests that the market is either showing resilience or is in an accumulation phase,” Jurina said.

He also pointed to April’s Bitcoin halving event as a historically bullish catalyst that could set the stage for a mid-term price increase, coupled with the reduction in exchange platform reserves and the increase in cold wallets.

As the repayment process progresses, Kraken has confirmed successful distributions of Bitcoin and Bitcoin Cash to creditors, with users on Reddit also reporting receiving funds. However, Bitstamp users may still be waiting.

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