SOL Supply Dynamics Improved, BTC Correlations Suggest Changing Market Dynamics

May 29, 2024 • 7 Min Read

Gox Risk Overblown

In a piece in late April, we noted a high likelihood that Mt. Gox repayments would begin toward the end of May or in early June. On Tuesday, the transfer of nearly 142k BTC, valued at approximately $9 billion, from Mt. Gox wallets to an unknown address generated a bearish market reaction. This transfer, likely part of a plan to repay creditors by October 31st, began in the early Asian morning hours. The immediate market response featured Bitcoin dropping to a low of $67,680 after reaching a high of over $70,000 on Monday. Concerns about potential selling pressure from such a large amount of BTC caused traders to pull back risk.

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In any other market, we would say that this supply is “priced in,” but this is crypto, and the market is not always as efficient as others, as information disseminates to different participants at differing rates. Thus, it is worth assessing the near-term risks, as 142k BTC equates to roughly 20% of daily volume across all exchanges.

Given that we are still mid-cycle and those receiving their BTC in-kind have been in the market for a very long time (high-conviction, long-term investors), and the funds that purchased BTC claims are likely hedged, we think the near-term selling pressure from these coins will be less than ...

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