Macro trader and economist Alex Krüger isn’t concerned about the Bitcoin (BTC) sell pressure from Mt. Gox and the German government.
The German government was first spotted moving Bitcoin to exchanges last month after their authorities seized 50,000 BTC as part of an investigation into Movie2k.to, a now-defunct illegal streaming site that was accused of distributing more than 880,000 pirated films between 2008 and 2013.
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After holding that 50,000 BTC until June 19th, the German government now only owns 23,964 BTC at time of writing, according to the digital asset de-anonymizing platform Arkham.
Krüger, however, says the market is entering the “final stretch of the German onslaught.”
“16,038 BTC ($910 million at the time) moved price by -3.5% ($2,000). The market could absorb the rest in one scoop. Just as the market can absorb Mt. Gox flows. These will eventually run out.”
Mt. Gox used to handle over 70% of Bitcoin’s trading volume, but it went bankrupt in 2014 after the platform was hacked.
Last July, the exchange announced its plans to disburse repayments to former customers in accordance with its bankruptcy rehabilitation plan.
Explains Krüger,
“Let’s run some numbers. Gox has a total of 141,000 to be distributed, with 95,000 to be distributed within 90 days (going to those who elected to receive an early distribution in exchange for a 10% haircut).
Of those 95,000:
– 20,000 going to credit funds
– 10,000 going to a New Zealand exchange (entangled in its own bankruptcy process) => won’t hit the market
– 65,000 going to individual creditors
Let’s make some assumptions:
– assume 30% of 85,000 gets sold (=25,500 BTC)
– assume Gox creditors sell that 30% in one scoop, rather than spread through time
– assume the quantity/price relationship is linear (even though it is not)
– assume Germany sells its entire remaining stack in one scoop
Then we would have: (23.7+25.5) / 16 * 0.035 = 10.5%. That would trigger a 10.5% insta-dump. The market can absorb that.”
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