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The crypto market is staring down its toughest headwind in months as the potential Bitcoin (BTC) sales from Mt. Gox and the German government begin to weigh heavily on investors’ minds.
Observers are wondering where prices could be headed next, with some forecasting an ease in market conditions only when selling pressure from Mt. Gox and Germany abates.
Bitcoin shed 7% of its value late Thursday, sending prices to their lowest point in four months to $53,550, and sparking a flurry of liquidations across the crypto market.
Repayments from Mt. Gox are expected to kick off in July after months of extensive preparations for fund distribution to creditors.
Sales from seized Bitcoin by Germany’s government could already be underway, analysts who spoke with Decrypt say.
Germany holds 50,000 BTC worth an estimated $2.72 billion at current prices. Users from defunct Japanese exchange Mt. Gox, meanwhile, are waiting to receive up to $7.7 billion in funds they lost due to a hack more than 10 years ago.
While the exact timing of the sales stemming from Germany and Mt. Gox remains unknown, some argue a resolution would likely ease selling pressure in the market.
“It’s highly likely that Germany selling 50,000 Bitcoin will mark a bottom,” Joe Burnett, a former Blockware Solutions analyst and senior product marketing Manager at Unchained, said Friday on Twitter. “Announcing a sale of this size is idiotic and creates a reflexive feedback loop.”
Burnett theorizes that large buyers could start lowering their bids to avoid overpaying Bitcoin, causing the price to drop further.
This would likely continue until all Bitcoin is sold. After the sale, the price may stabilize or rise again, he said.
Thursday’s market drag follows a significant transfer from a cold storage wallet belonging to the Mt. Gox bankruptcy estate.
“Selling pressure will unlikely decrease in the coming days,” Rachel Lin, CEO and co-founder of derivatives decentralized exchange SynFutures, told Decrypt.
While the market expects most Mt. Gox users to dump their tokens, a bounce could be warranted if selling is lower than anticipated, Lin said.
“On the other hand, if there is enough selling to push the price lower, we might be looking at the $50,000 level,” Lin said.
Edited by Stacy Elliott.
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