Mt. Gox delays Bitcoin refunds, but is it really the end of BTC’s troubles?

  • Gox Bitcoin custodians to delay issuance by an extra year.
  • BTC volumes have dipped in the last seven months as a result of low liquidity.

Earlier this year, the custodians of the Mt. Gox Bitcoin announced that they were working toward Bitcoin payouts to creditors of the collapsed exchange. Those payouts were supposed to take place before the end of 2023 and many expect the release to trigger a wave of sell pressure.

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Bitcoin holders are now breathing a sigh of relief following an announcement that the Mt. Gox payout has been delayed by another year. So, why is this a relief? Well, the custodians of Mt. Gox’s Bitcoin reportedly have 138,000 BTC which will be issued to creditors.

“Mt. Gox’s holdings currently hold approximately 138,000 Bitcoin (BTC), valued at approximately $3.7 billion at current prices, along with a similar amount of Bitcoin Cash (BCH) valued at $29 million, and 69 billion Japanese yen. ($46.5 million).”

The large sum of Mt. Gox Bitcoin is expected to trigger a wave of sell pressure once released, hence the previous concern. This is because those expecting to be paid back have been waiting for roughly nine years. The long-term duration means their holdings are deep in profit hence there is an incentive to sell. On the other hand, the delay is disappointing because they have to wait for longer.

Bitcoin continues to struggle with low liquidity

Over the last few months, it has also become apparent that Bitcoin liquidity has been declining. This is particularly evident considering derivatives and spot exchange volumes since March. According to this assessment by pseudonymous CryptoQuant analyst Crazzyblockk, Bitcoin’s spot volume is down by 94% since March, while its derivatives volumes were down by 73% during the same period.

BTC spot and derivatives volumes

Source: CryptoQuant

The declining volume suggested that Bitcoin did not manage to carry the same momentum that we observed in January and February.

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How many are 1,10,100 BTCs worth today

The above findings underscored the current state of Bitcoin demand. The level of open interest in BTC tanked considerably in August and has been struggling to recover in September. The same was applicable for Bitcoin funding rates in the derivatives segment.

Bitcoin open interest and funding rates

Source: Cryptoquant

The low volume and demand reflected low participation from the institutional investor class. This could be due to a variety of reasons including fear of sell pressure from Mt. Gox Bitcoin issuance, and high interest rates leading to low access to liquidity.

Bitcoin also lacked a strong enough catalyst to build on the initial demand observed at the start of the year. Many analysts expect a spot ETF approval to be the much-awaited catalyst.


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