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Mt. Gox Is a ‘Thorn in Bitcoin’s Side,’ Says Analyst
Bitcoin has struggled due to the recent Mt. Gox redemptions and market trends, but the bearish behavior should not be interpreted as unfavorable.
Last week, Bitcoin (BTC) ended the week at around $55,850, marking an 11% decline from the previous week’s closing price of $62,775. The week saw significant selling pressurewith BTC dropping as low as $53,500 on Thursday before bouncing to $58,250 and finally settling at $55,850.
Spot BTC ETFs have seen $238 million in net inflows during the recession. Cumulative trading volume since inception stands at around $315 billion, showing a decline in trading activity. This is in line with typical market behavior, as Q3 typically sees lower trading activity.
“These data should not be seen in a negative light, but rather as a seasonal trend, especially among traditional finance investors,” observed Matteo Greco, research analyst at Fineqia International.
Interestingly, the decline showed no correlation with BTC Spot ETFs flows, a departure from historical patterns where ETF flows significantly influenced price movements.
“However, for the first time since their inception, there is a clear decoupling between price action and capital flows, indicating that recent price behavior has been driven primarily by trading activity within the crypto-native space,” Greco added.
Mount Gox
The high on-chain selling pressure is due in part to the start of the highly anticipated Mount Gox refunds.
Founded in 2010, Mt. Gox quickly became the world’s largest Bitcoin exchange. Its success was short-lived, as it abruptly ceased trading, shut down its website, and filed for bankruptcy in early 2014, disclosing the loss of approximately 850,000 BTC, worth about $450 million at the time, due to thefts from its hot wallets over several years starting in late 2011.
The official confirmation of the refunds, marked by the movement of 47,228 BTC from a cold wallet associated with Mt. Gox, has sparked market reactions. Furthermore, after a recent halving which reduced mining rewards by 50%, selling pressure from miners continues to impact prices, although it has recently decreased.
The recent drawdown has significantly reduced unrealized profits, driven by long-term holders selling their coins. The MVRV ratio now stands at around 1.5, indicating an average unrealized profit of 50% among market participants, down from over 200% in March.
“This trend suggests that the recent price action has been primarily due to long-term holders taking profits and selling their coins to new buyers at higher purchase prices,” Greco added.