As the restitution for the users of the defunct Mt. Gox exchange approaches after a decade-long wait, the market is bracing itself for potential turbulence. Recent reports suggest that market participants are feeling anxious about the impending distributions and are worried about the possibility of increased sell-offs.
Bitcoin, the leading cryptocurrency, has been on a downward trajectory since the start of June, failing to gather any significant upward momentum despite modest inflows from ETFs. The price of Bitcoin dipped below the $60,000 mark on July 3rd, followed by a brief recovery. However, the following day saw a sharper decline in price.
According to a recent update by QCP Capital, a Singapore-based crypto asset trading firm, Bitcoin’s price is expected to remain relatively stable in the near term. Despite a bullish run in the US equity market, driven by Federal Reserve Chair Jerome Powell’s remarks on disinflation, Bitcoin and Ethereum have not seen a significant uptick in their prices, hovering around $57,000 and $3,000 respectively.
Options Market and Investors’ Sentiment
The options market currently shows a strong bias towards the upside, indicating a potential year-end rally in Bitcoin’s price. Investors have shown considerable interest in longer-term options with strike prices set at 100k and 120k. However, QCP Capital remains cautious about Bitcoin’s performance in the third quarter due to the uncertainty surrounding the potential supply shock from the upcoming Mt. Gox fund distribution.
In 2014, Mt. Gox lost 850,000 Bitcoins in a hacking incident, leading to insolvency. The exchange owed approximately $9.4 billion worth of Bitcoin to around 127,000 creditors who have been patiently waiting to recover their funds for over a decade. The recent announcement of the fund distribution process commencing in July has brought relief to the affected users but has also raised concerns about additional selling pressure in the market.
The impending restitution of Mt. Gox’s funds has created a sense of uncertainty in the market, impacting the price of Bitcoin. While investors remain optimistic about a potential year-end rally, the current market sentiment is cautious due to the lingering effects of the Mt. Gox collapse. It remains to be seen how Bitcoin will navigate through these challenges in the coming months.
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