Bitcoin
Bitcoin (BTC) Price Drop in Germany, Mt. Gox, Miner Selling Pressure May Be Overdone: NYDIG
The argument that the above catalysts are behind the big price decline has been overstated, Greg Cipolaro, head of research at NYDIG, said in a note Wednesday.
“While emotions and psychology may dominate in the short term, our analysis suggests that the price impact of a potential sell-off may be overstated,” he wrote.
“We are not ignoring 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.
In recent weeks, investors have been fixated on transfers related to Bitcoin addresses tied to the holdings of now-defunct exchange Mt. Gox, the U.S. government and the German state of Saxony, sparking fears of imminent sales of more than $20 billion in assets held by the three entities combined.
Even though all three were selling all of their holdings — roughly 375,000 BTC as of June 9 — at once, Cipolaro found that BTC’s price decline in recent 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 to estimate the price impact of block sales of common stocks.
Cipolaro also argued that recent reports about miners capitulating and selling their BTC stashes en masse following this year’s halving were not only exaggerated, but in some cases outright inaccurate.
NYDIG data showed that publicly listed mining companies actually increased their bitcoin holdings in June. And while the amount of BTC sold increased slightly last month, it was still well below the levels seen earlier this year and last year.
Cipolaro advised against trusting 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 the coins moved. That’s it,” he argued. “They may have been posted as collateral or loaned, not necessarily sold.”