Crypto Ecosystem

Mt.Gox prepares to distribute Bitcoin. Could it push the BTC price lower?

, May 30, 2024

In this week’s crypto highlights, we explore price movements and other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.

Market spotlight: Mt.Gox made its first BTC transfer in over five years

Established crypto enthusiasts might know that there is a “boogeyman” in Bitcoin markets called Mt.Gox. Once every few months, the ghost of this defunct crypto exchange appears with news related to “further compensation,” sometimes frightening market participants about “increased selling pressure potential.” Shortly afterward, the ghost of Mt.Gox retreats behind the curtain, typically making only minor progress regarding actual Bitcoin compensation.

However, it seems that this 10-year story may be gradually ending. On May 28, Arkham reported that Mt.Gox initiated a transaction of $9.62 billion worth of BTC from dozens of wallets. This marked the first movement of these funds in more than five years.

The same day, Mt.Gox’s trustee published a statement, confirming that the transfer was in preparation of Bitcoin repayments to creditors. Former Mt.Gox CEO Mark Karpeles also clarified that the movement of funds was part of the distribution process. Mt. Gox’s final repayment deadline is October 31, 2024.

Could Mt.Gox repayments cause a sell-off?

We covered the situation regarding Mt.Gox’s Bitcoin repayments more than a year ago, on this very blog. At that time, we pointed out that Mt.Gox collapsed when BTC’s price was around $800, meaning all creditors will be in profit, and may thus have an incentive to sell their digital assets.

However, it is unlikely that all creditors will jump off crypto, because:

  • Mt.Gox users are early Bitcoin supporters, and this group typically focuses on much more than just BTC’s price performance.
  • Many creditors opted to receive repayments in digital assets, even while they had an opportunity to obtain cash faster.

Since we wrote last year’s post about events surrounding Mt.Gox, Bitcoin’s price has more than tripled, meaning that creditors have more value on their claims. Love of crypto and the variables above aside, some still may be more encouraged to sell.

Even so, Mt.Gox’s Bitcoin repayments remain unlikely to move the BTC price significantly. Bitcoin now has U.S. spot exchange-traded funds (ETFs) behind its back, which continue to show massive demand, accumulating $143 million worth of BTC every trading day on average. Over 1 million BTC has been absorbed throughout this year so far, and Bitcoin’s price is still near its all-time high. In addition, Mt.Gox’s 142,000 BTC may not reach open markets at the same time, minimizing the impact of the distribution event. 

Instead of Bitcoin, Mt.Gox’s compensations could have a larger effect on Bitcoin Cash. It has less liquidity and lower adoption, and Mt.Gox creditors essentially received it as “a free bonus,” which may create less attachment. But again, depending on the distribution process, any selling pressure could be mitigated almost entirely. 

In any case, it’s nice to see progress, and Mt.Gox creditors could soon receive their Bitcoin payouts after 10 years of waiting. Perhaps, this particular boogeyman will finally retire.

Other noteworthy market events

First crypto ETPs began trading on the London Stock Exchange

On May 22, asset managers WisdomTree and 21Shares announced that the U.K. Financial Conduct Authority (FCA) greenlighted the listing of their Bitcoin and Ethereum exchange-traded products (ETPs) on the London Stock Exchange (LSE). On May 28, these products began trading on the exchange, making history as the first crypto ETPs in the country. 

Of course, there’s a catch. Only professional and institutional investors can join the fun. In 2021, the local regulator banned retail customers from trading crypto derivatives.

Solana validators will start receiving full priority fees

Solana validators voted in favor of a proposal to receive the whole pie of transaction priority fees, instead of a 50/50 split between burning fees and rewarding validators.

Priority fees are optional, and allow users to increase the chances of their transactions getting processed faster, ensuring they jump to the front of the execution queue. This change is designed to motivate validators to focus on network security and efficiency, rather than dabbling in arbitrage strategies that involve reordering or excluding transactions.

However, this new proposal might have a downside: SOL could become more inflationary. According to Laine, a Solana staking validator, this change could inflate the effective rate to around 9.9% annually, from the current 5.3%. 

However, this is not a complete “SOL goes brrr” situation, as a 50% burn of the base fees remains intact.

Telegram unveiled the launch of its new internal cryptocurrency

According to a message sent to developers, Telegram is set to launch its own internal digital currency, called Stars, on June 12, 2024. This new asset will be used to pay for digital goods and services in bots and mini-applications. This initiative came after Apple notified Telegram of violations to its policy, which prohibits accepting certain payments from customers. 

Users will be able to purchase Stars in the App Store or Google Play, and then use them for digital purchases in Telegram. Meanwhile, developers will be able to withdraw funds in new currency using TON.

However, the reaction from bot owners was less than stellar. They pointed out that the App Store and Google Play charge a 30% commission within their internal purchasing mechanisms, making purchases of digital goods and services less attractive for Telegram users.

One sentence news

  • JPMorgan does not expect the U.S. Securities and Exchange Commission (SEC) to approve more spot crypto ETFs, while Standard Chartered predicts that Solana and XRP might be the next candidates for approval.
  • MetaMask plans to integrate Bitcoin support within the next month.
  • Floki developers introduced a Telegram-based trading bot tool that allows FLOKI holders to trade any token on the BNB Chain network.
  • Hong Kong’s regulator is considering allowing staking for spot Ether ETFs.
  • Kabosu, the dog who inspired the DOGE meme, passed away.
  • Uniswap Foundation disclosed its assets ahead of the fee mechanism vote.

How is Bitcoin doing?

After the approval of Ether ETFs by the SEC last week, crypto markets had a hangover, with multiple top digital assets, including Bitcoin, experiencing a one-digit price decrease. News about Mt.Gox’s transfer also contributed to a BTC price drop of 3% in a week.

Bitcoin is arguably consolidating inside a symmetrical triangle, indicating a period of uncertainty, or a pause in the established trend. Some analysts also claim that this could be a bullish flag rather than a symmetrical triangle, suggesting a further continuation of the uptrend.

U.S. spot Bitcoin ETFs currently show over 10 days of consecutive net inflows, which could support the bullish view. In addition, Bitcoin futures interest reached a 16-month high, while futures premiums are slightly above the neutral range. This hints at moderate optimism within the market.

Other notable price performances

  • Notcoin (NOT) re-entered the top 100 digital assets by market cap, showing a more than 130% price increase. Potential catalysts behind this move are considered to be the opportunity of NOT staking, the introduction of new missions (some are associated with other games), and the general tap-to-earn hype within the industry.
  • CHZ saw a 20% price surge, amid the anticipation of the UEFA football championship.
  • Memecoins temporarily reclaimed their status as one of the best-performing sectors, with BONK, FLOKI, and WIF showing over 15% price increases. But they then lost most of their weekly gains.
  • TIA enjoyed increased social activity, which arguably helped the asset register an almost 20% weekly price jump.

Tune in next week, and every week, for the latest CEX.IO crypto highlights. For more information, head over to the Exchange to check current prices, or stop by CEX.IO University to continue expanding your crypto knowledge.

Disclaimer: For information purposes only. Not investment or financial advice. Seek professional advice. Digital assets involve risk. Do your own research.

Related

Crypto Ecosystem

Could Grayscale’s victory trigger a new bull market for Bitcoin?

Grayscale’s victory against the SEC sparked a new wave of optimism in crypto markets.
But does this mean the beginning of a new bull run, or is it just a local jump?

Aug 31, 2023 | 14 min read
Crypto Ecosystem

How bank shutdowns moved crypto markets

As we mentioned two months ago, the 200-week SMA could be a longer term target for BTC. Now the asset is trying to sustain above it.

Mar 16, 2023 | 11 min read
Crypto Ecosystem

What could be driving recent crypto price corrections?

Although Bitcoin jumped above $24,000, this could be a bullish trap. Discover why in our crypto highlights!

Feb 16, 2023 | 10 min read