Bitcoin (BTC) has experienced a turbulent ride recently, facing a continuous sharp drop to $38,500 from January 12th until January 24th, which experienced a recovery of the $40,000 level.
Several factors have contributed to this volatility, including the trading launch of the Bitcoin spot in the US Exchange-Traded Funds (ETFs), which led to significant selling pressure from asset manager Grayscale, and concerns surrounding the unlocking and repayment of Mt. Gox, the failed BTC exchange.
Repayment Sparks Selling Pressure Heightened Volatility
As reported by Bitcoinist on Monday, the Mt. Gox trustee has confirmed initiating a verification process for eligible repayment clients of the defunct exchange.
Clients have received an email outlining the steps for confirming account ownership and receiving repayments in BTC and Bitcoin Cash (BCH) through designated crypto exchanges, Bitstamp and Kraken.
The crypto community is on high alert as the repayment process could significantly release BTC and Bitcoin Cash into the market. This has increased selling pressure and uncertainty among investors, contributing to the recent price volatility.
Blockstream CEO Adam Back has weighed in on the situation, expressing skepticism regarding the market dumping of BTC by Mt. Gox creditors. Back highlights the long-term potential of Bitcoin, questioning why creditors would choose to sell at $40,000 when the market is poised for further growth, particularly with the upcoming ETFs and BTC halving.
Adam Back suggests holding the Bitcoin in cold storage would be a more rational choice given the favorable market conditions. Back stated:
After a 10-year forced HODL from $450, what kind of clown would market dump at $40k, with ETF tailwind about to hit, in an early bull market leading into a halving, vs say just wait another year for $400k+. doesn’t make any sense to me either. just cold store them.
Bitcoin Market Volatility
Out of the 200,000 BTC discovered by Mark Karpelès, former CEO of Mt. Gox, there are reportedly 142,000 Bitcoin remaining. The remaining BTC will be the subject of the repayment process, with Mt. Gox opting to keep the Bitcoin and not convert it to USD for bankruptcy legal expenses.
Back highlights that this approach differs from the US bankruptcy approach of exchanges like FTX, where cryptocurrencies are sold for USD.
Overall, the repayment process for Mt. Gox creditors adds a new dimension of uncertainty to the Bitcoin market, contributing to recent price fluctuations.
While concerns persist, industry experts such as Adam Back emphasize BTC’s long-term potential, urging creditors to consider holding their Bitcoin rather than selling at current levels.
Currently, BTC is trading at $40,100, experiencing a predominantly negative trend across various time frames. However, the year-to-date time frame stands out with a remarkable BTC price recovery since the end of the crypto winter. During this period, Bitcoin has demonstrated a positive growth of 74%.
Featured image from Shutterstock, chart from TradingView.com