- Bitcoin has slumped in the past week, falling 6% to sit well under the US $60k milestone.
- Several catalysts are behind the drop – largely, investors are concerned about the impact of US $150m+ Bitcoin re-entering supply.
- The German government seized and released over US $75m worth of BTC in the past week, while Mt. Gox is gearing up to repay victims from the exchange’s hack a decade ago.
- However, some analysts believe the doomsday scenario is being overblown.
You only have to exist within the crypto community for a month or two to realise that the market is pretty dramatic. Even minor “difficulties” may cause panic among investors, which can easily snowball into something more drastic.
So is the current Bitcoin slide – down 6% this week – a case of the above, or is it something we should really be worried about?
Related: Bitcoin Dips Below $60K as Fed Chair Dampens Rate Cut Hopes
Will Biden be Replaced With an Anti-Crypto Candidate?
Just as the United States’ pending election was a major catalyst for pro-crypto sentiment, it might just be its undoing. Earlier this year saw Donald Trump cast Bitcoin and friends into the electoral spotlight, campaigning for improved regulations and broader adoption.
Joe Biden eventually jumped on board and was likely a catalyst in the SEC approving an Ether ETF when all hope seemed lost.
However, those following the presidential race may have noticed that, at times, Biden’s age is catching up with him. The Democratic party is strongly considering a last-gasp replacement for Biden – which may mean a traditionally anti-crypto candidate entering the fray.
Government and Mt. Gox Sell-off Behind Recent Drop
That’s not all Bitcoin is contending with.
A more immediate issue is mass sell-offs coming from governments, and eventually, Mt. Gox victims. In the past week the German government seized and disposed of over AU $100m worth of BTC. This was a large dump of supply onto a market that was already cooling off.
Related: Justin Sun Proposes Over-the-Counter Purchase of BTC Directly From German Government
To make matters more complex, Mt. Gox repayments are set to go ahead in the coming weeks. Approximately US $73m (AUD $108m) worth of Bitcoin Cash will be distributed to victims of the decade-old hack, comprising a whopping 20% of BCH’s 24-hr trading volume.
It’s worth noting that the market may have overreacted to the Mt. Gox compensation a little hastily, as many speculated that customers would be repaid in BTC. However, it is BCH that is set to bear the brunt of a mass supply drop, according to several analysts.
Our analysis shows that the selling pressure for BCH will be four times larger than for BTC: 24% of the daily trading value for BCH vs 6%. Of the daily trading value for BTC.
Peter Chung, CoinGecko
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