A document that did not contain many words dealt a heavy blow to the crypto market.
During the European session today, Bitcoin experienced a sharp decline, plunging 2.4% in just one hour and approaching the 60,000 integer mark at one point, falling to a low of $60,500. Ethereum also fell nearly 3% in one hour, falling to a low of $3,240. Affected by this, the crypto market saw a general decline. Rats, which once led the market this morning, almost gave up all of its overnight gains, and Altcoin generally fell by more than 10% during the day.
According to Coinglass data, within one hour of the market plunge, the entire network had a liquidation of $105 million, with long orders liquidating $103 million and short orders liquidating $1.94 million. Bitcoin liquidated $41.14 million and Ethereum liquidated $31.39 million.
Blockchain stocks generally fell before the US stock market opened, with Coinbase down 7.26%, Microstrategy down 5.19%, and Riot Platform down 3.66%.
And the "culprit" of all this is Mt.Gox.
Mt.Gox compensation is about to start
According to the official website documents disclosed earlier, the Mt.Gox trustee stated that it will start the BTC and BCH repayment work from the beginning of July. Currently, these preparations have been completed, and the exchange and confirmation of the information required for repayment have been completed with the relevant exchanges.
Because the amount of compensation is too huge, Mt.Gox will repay a total of 142,000 BTC (about 8.72 billion US dollars) and 143,000 BCH (50.765 million US dollars) to creditors, a total of about 8.77 billion US dollars in selling pressure. Soon after the news was announced, the market heard the news and began to fall.
At this time, the market liquidity was poor. In the absence of sufficient buying, the selling pressure of nearly 10 billion US dollars made the already panic-stricken market worse, and investors chose to exit the market and wait and see.
In fact, as early as the early morning of May 28, the Mt.Gox wallet, which had been declared bankrupt for 10 years and had been in cold wallet for 5 years, had unusual movements. Ten transactions were made to an unknown address, transferring 141,685 bitcoins.
Will the selling pressure be released all at once?
Mt.Gox had previously considered the market risks brought about by huge selling pressure.
According to the announcement on Mt.Gox's official website, the repayment plan provided by Mt.Gox to creditors includes basic repayment and proportional repayment. The basic repayment part allows the first 200,000 yen claimed by each creditor to be paid in yen, while the proportional repayment provides creditors with two flexible options, namely early lump-sum repayment, or mid-term repayment and final repayment.
Among them, a one-time repayment can only get partial compensation. For the part exceeding 200,000 yen, the creditor can choose a mixed method of BTC, BCH and yen or pay the full amount in legal currency. Choosing mid-term repayment and final repayment will get more compensation, but it may take several years. In terms of payment methods, it also provides cash and cryptocurrency options.
Overall, this method of dispersed compensation helps mitigate the sharp market decline caused by overly concentrated selling.
In addition, due to the long time, a considerable number of creditors sold the bonds in packages to funds. Considering that interest rates may be lowered at the end of the year, some funds may not sell them immediately.
How will the market outlook be?
Historically, there has been a period of boredom in the market in the months following the Bitcoin halving.
DWF partner Andrei Grachev said that the market share of Altcoin has been the same since 2017 at the beginning of 2021 (14.45%). Google searches have been declining since March 2024. Stable BTC = confidence, but BTC cannot rise 50 times at least now, but Altcoin can. If Bitcoin remains stable, there will be a wave of altcoin bull market in a few months.
Markus Thielen, founder of 10x Research, said that technically, Bitcoin appears to be following a Double Top pattern and is currently testing support. Unless the pattern fails, this should be our base case assumption. This pattern could easily lead to a drop in BTC prices to $50,000 or even $45,000. The U.S. election and the consumer price index should be positive later this year, but prices could still see a steeper correction.
