Bitcoin bulls meet their third final boss after US and Germany: Mt. Gox

The Mt. Gox repayments are finally here, whether the market is ready or not

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Primakov/Shutterstock modified by Blockworks

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Bitcoin dipped to its lowest point since February as Mt. Gox’s trustees transferred its first repayments to crypto exchange Bitbank early Friday morning.

Mt. Gox’s transfer of 1,545 BTC ($84.87 million at the time) came after prices had already sunk more than 10% over two days, slipping from $60,330 to $53,950. 

The Mt. Gox move comes as the German government continues to direct hundreds of millions of dollars in bitcoin to multiple crypto exchanges.

Germany sent bitcoin as recently as this morning, only one hour after Mt. Gox’s transfer. BTC has since recovered slightly to $55,300 and no other Mt. Gox transfers had hit the chain at time of writing.

The bigger and redder the bubble, the more bitcoin was transferred. Any bubble without an arrow is from addresses tied to German authorities.

After subtracting the 3,433 BTC ($190.7 million) that has been sent back to Germany’s wallets from crypto exchanges, the government’s tally over the past few weeks is now at 8,632.44 BTC ($482 million), according to Arkham Intelligence data, which tags and collates blockchain transaction histories. 

Addresses tied to the US government otherwise transferred seized crypto totaling 3,940.28 BTC ($217.7 million now, $241.22 million then) to Coinbase late last month.

Germany’s addresses still retain 41,226 BTC ($2.33 billion) while the US wallets have 213,297 BTC ($12.04 billion) along with over $400 million in other cryptocurrencies.

Read more: US, German governments have sent $738M in bitcoin to exchanges over the last 2 weeks

Mt. Gox was one of the earliest crypto exchanges, responsible for 70% of global volume at its peak across 2013 and 2014. 

Almost 750,000 BTC belonging to its users, as well as an additional 100,000 BTC owned by the exchange, was stolen over a number of years — the equivalent of 4.3% of the current circulating supply.

The losses were first disclosed in February 2014, which was shortly after one of bitcoin’s first major bull runs. BTC exploded from $15 in January 2013 to over $1,200 by that December. 

Only one-sixth of the bitcoin lost by Mt. Gox was successfully retrieved, totaling 143,232 BTC ($7.85 billion) as of earlier this week. Mt. Gox’s transfer this morning represented just 1% of the bitcoin set for in-kind distributions. 

Repayments overall are set to be wound up over the next 90 days but former CEO Mark Karpeles reportedly described that as the worst-case scenario. 

The general worry is that Mt. Gox creditors, who’ve been waiting for a decade to receive their funds back, could opt to sell and drive prices down further, which would explain the recent bitcoin dip.

Alex Thorn, head of firmwide research at Galaxy Research, previously countered that notion, suggesting that creditors may opt to continue holding given how long the wait has been.

In any case, bitcoin’s recent weekly drop of up to 12.6% is about par for the course for this bull market. The blue columns on the chart below show weekly losses on a daily rolling basis. 

Bull markets are shown by the green bands and the dotted lines are major timeline events

While days on which bitcoin had gone down week-on-week became more frequent after the March peak, the size of BTC’s most recent drawdown matches what was seen even during its run from $20,000 to $60,000.

The real question is whether bitcoin will bounce. Although flows have dwindled, and even turned negative at some points, spot bitcoin ETFs could run counter-narrative to the government-and-Gox melange of malaise, considering they’ve helped keep pace since their launch in January. 

“Bitcoin ETF flows might see an uptick if market participants believe that economic uncertainty will drive the Fed towards eventual rate cuts, enhancing the appeal of bitcoin as an inflation hedge,” Jag Kooner, Head of Derivatives at Bitfinex, told Blockworks.

“However, significant inflows would depend on broader market sentiment and risk appetite. Currently… we’ve recently seen quite underwhelming flows and a lack of ‘dip-buying.’”


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