Bitcoin prepares for impact as Mt Gox payouts pose a potential threat to trigger a selloff in July
Bitcoin price has encountered obstacles in its upward trajectory as a result of selling by retail investors and the forthcoming payouts to Mt. Gox creditors. The market may see a recovery in August once the selling pressure from Mt. Gox subsides and FTX creditors reinvest their cash payouts. However, investors are uncertain whether Bitcoin will experience a surge or a decline in July.
The bearish trend in Bitcoin’s price can be attributed to the anticipated sell-off of Bitcoins by Mt. Gox, which is expected to begin in July. Analysts from JPMorgan predict that this selling pressure could initially push prices downwards, but a recovery may be expected by August. Adding to the complexity of the situation is the influx of $11 billion in fiat compensation to FTX creditors, some of which may find its way back into the market.
Past events, such as the liquidation of crypto assets by Gemini Earn creditors, have had a depressing effect on the crypto market since May 29. JPMorgan’s bitcoin futures position indicator, which is based on CME futures, suggests that it is primarily retail customers, not institutional investors, who have been selling off their crypto holdings.
Mt. Gox creditors are set to receive 142,000 bitcoins, valued at around $9 billion at current prices, from July to October. Although the deadline for repayment is in October, JPMorgan analysts believe that most repayments will occur in July, which could further pressure the market. However, there is potential for a rebound from August onwards.
Looking ahead, FTX creditors will receive significant cash repayments estimated to be between $14 billion and $16 billion once their wind-down plan is approved in October. Unlike previous repayments in the form of assets, these cash injections could inject positive momentum into the crypto market as recipients consider reinvesting in digital assets.
The recent market reaction has been swift and severe, with Bitcoin experiencing a 7.5% correction and falling below the $61,000 mark as of June 27, 2024, settling at $60,720. As July approaches, investors are closely watching whether Bitcoin will experience a resurgence or further uncertainty by the end of the month.