Journalist
Posted:
- Gox Bitcoin administrators will delay the issuance for an additional year.
- BTC volumes have declined over the past seven months due to low liquidity.
Earlier this year, the custodians of the Mountain Gox Bitcoin announced that they were working on Bitcoin payouts to the creditors of the collapsed exchange. These payouts would occur before the end of 2023 and many expect the release to trigger a wave of selling pressure.
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Bitcoin holders are now breathing a sigh of relief after the announcement that Mount Gox’s payout has been postponed for another year. So why is this a relief? Well, the custodians of Mount Gox Bitcoin Reportedly have 138,000 BTC that will be issued to creditors.
“Mt. Gox’s assets currently include approximately 138,000 Bitcoin (BTC), valued at approximately $3.7 billion at current prices, along with a similar amount of Bitcoin Cash (BCH) worth $29 million, and 69 billion Japanese yen. ($46.5 million).”
The large sum of Mount Gox Bitcoin is expected to cause a wave of selling pressure once it is released, hence the earlier concern. This is because those expecting a refund have been waiting for about nine years. The long term duration means their holdings make large profits, giving them an incentive to sell. On the other hand, the delay is disappointing because they have to wait longer.
Bitcoin continues to struggle with low liquidity
In recent months it has also become clear that Bitcoin’s liquidity has decreased. This is especially evident when you look at derivatives and spot exchange volumes since March. According to this assessment by pseudonymous CryptoQuant analyst Crazzyblockk, Bitcoin spot volume has fallen 94% since March, while derivatives volumes fell 73% over the same period.
Source: CryptoQuant
The falling volume suggested that Bitcoin failed to maintain the same momentum we observed in January and February.
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The above findings underlined the current state of Bitcoin demand. The level of BTC open interest fell significantly in August and has struggled to recover in September. The same applied to Bitcoin financing rates in the derivatives segment.
Source: Cryptoquant
The low volume and demand reflected low participation from the institutional investor class. This could be due to several reasons, including the fear of selling pressure from the issuance of Mount Gox Bitcoin and high interest rates leading to low access to liquidity.
Bitcoin also lacked a catalyst strong enough to build on the initial demand seen early this year. Many analysts expect a spot ETF approval to be the long-awaited catalyst.