Macro trader and economist Alex Krüger is not concerned about the Bitcoin (BTC) selling pressure from Mount Gox and the German government.
The German government was first spotted last month moving Bitcoin to exchanges after their authorities seized 50,000 BTC as part of an investigation into Movie2k.to, a now-defunct illegal streaming site accused of operating between 2008 and 2013 distribute more than 880,000 pirated films.
After owning those 50,000 BTC until June 19, the German government now owns just 23,964 BTC at the time of writing, according to the digital asset de-anonymization platform. Arkham.
Kruger though say the market is entering the “last stretch of the German attack”.
“16,038 BTC ($910 million at the time) increased the price by -3.5% ($2,000). The market could absorb the rest all at once. Just as the market can absorb the flows from Mount Gox. These will eventually run out.”
Mount Gox used to handle more than 70% of Bitcoin’s trading volume, but went bankrupt in 2014 after the platform was hacked.
Last July, the exchange announced its plans to issue refunds to former customers in accordance with its bankruptcy rehabilitation plan.
Explains Kruger,
“Let’s go over some numbers. Gox has a total of 141,000 to distribute, with 95,000 to be distributed within 90 days (going to those who opted to receive an early distribution in exchange for a 10% haircut).
Of those 95,000:
– 20,000 goes to credit funds
– 10,000 going to a New Zealand stock exchange (caught up in its own bankruptcy process) => won’t hit the market
– 65,000 goes to individual creditors
Let’s make some assumptions:
– assume 30% of 85,000 is sold (=25,500 BTC)
– assume that Gox’s creditors sell that 30% in one go, instead of spreading it over time
– assume that the relationship between quantity and price is linear (even if it is not)
– assume Germany sells its entire remaining pile at once
Then we would have: (23.7+25.5) / 16 * 0.035 = 10.5%. That would cause an insta-dump of 10.5%. The market can absorb that.”
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