On July 8, prominent crypto analyst and macroeconomist Alex Krüger shared a detailed thread on the social media platform X, providing insights into the recent Bitcoin price movements and the market dynamics driven by large Bitcoin sales from Mt. Gox exchange and the German government.
Krüger began by discussing Germany’s federal police, which had been holding 50,000 BTC up until late June 2024. Since June 19, according to Krüger, they have been selling these holdings in small increments. Earlier today, they apparently moved a significant 16,038 BTC to brokers and exchanges, reducing their balance to 23,788 BTC. Krüger noted that this large sale moved the Bitcoin price by -3.5%, equating to a $2,000 drop. He emphasized that although these sales had exerted downward pressure on Bitcoin prices, the market could absorb the remaining German-held Bitcoins as well as the incoming Mt. Gox distributions.
Krüger then shifted his focus to the anticipated flows from Mt. Gox, a defunct cryptocurrency exchange that is set to distribute 141,000 BTC to its creditors. He noted that 95,000 BTC would be distributed within 90 days to creditors who opted for early distribution with a 10% haircut. Of this amount, he said 20,000 BTC would go to credit funds, 10,000 BTC to a New Zealand exchange entangled in its own bankruptcy process (which would not hit the market), and 65,000 BTC to individual creditors.
To estimate the potential market impact, Krüger made several assumptions:
If 30% of the 85,000 BTC (25,500 BTC) gets sold in one go, along with Germany selling its remaining 23,788 BTC in one scoop, the total would be 49,288 BTC.
Assuming a linear relationship between quantity and price impact, which simplifies the calculation even though it is not entirely accurate, this combined sale could trigger a 10.5% price drop.
Krüger expressed confidence that the market could absorb these sales. He noted that while there would be temporary selling pressure, these are finite events, and his outlook for Bitcoin into the end of the year remained positive.
From a technical analysis standpoint, Krüger predicted that Bitcoin would trade in the $50,000 range for some time. He identified potential downside levels at $52,000 and between $48,000 and $49,000 if extreme selling pressure occurred. On the upside, he anticipated Bitcoin could bounce back to the 200-day moving average at $58,500, where aggressive sellers might re-enter the market.
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