The research by Presto Labs predicts that when the Mt. Gox bankruptcy repayments begin, there could be selling pressure on Bitcoin Cash (BCH). This could cause the collapse of the current 16th cryptocurrency by market cap.
Mt. Gox and the refunds: a study predicts the possible collapse of Bitcoin Cash (BCH)
According to the research by Presto Labs, it seems that when the Mt. Gox bankruptcy repayments begin, there could be selling pressure on Bitcoin Cash (BCH). This could lead to the possible collapse of the current 16th cryptocurrency by market cap.
Mt. Gox will have to return to its former clients 143,000 BCH (equal to 73 million dollars) and 9.5 billion dollars in BTC.
In this regard, the head of research at Presto Labs, Peter Chung, pointed out that the real concern is more about BCH than BTC. Here is what Chung wrote:
“Our analysis shows that the selling pressure for BCH will be four times higher than that for BTC – that is, 24% of the daily trading value for BCH versus 6% of the daily trading value for BTC. The assumptions are: 1) for BTC, only a fraction will be sold, given that the creditors are mostly wealthy Bitcoiners “with diamond hands”; 2) for BCH, 100% will be sold in the short term, given the much weaker investor base.”
In practice, the 73 million dollars of BCH refund are equivalent to 24% of the daily trading value of BCH, while for BTC they are only 6%.
Not only that, Chung predicts that it is more likely that former clients refunded by Mt. Gox will be willing to sell all their BCH immediately, rather than sell BTC.
Mt. Gox and the refunds: what will happen to Bitcoin Cash (BCH)?
After years of uncertainties and legal implications, at the end of June the crypto-exchange Mt. Gox finally announced the start of payments for reimbursement to its creditors. Exactly from the first of July until the 31st of October 2024, the former clients will receive their Bitcoin and Bitcoin Cash as reimbursement.
This will be the period to keep an eye on both for the selling pressure of Bitcoin Cash (BCH) and the lack of liquidity.
Not only that, Chung’s note from Presto Labs continues to describe his point of view on the situation as follows:
“The perpetual BTC longs paired with perpetual BCH shorts are the most efficient and neutral way to express this point of view, apart from the funding rate risk. Those who wish to lock in a funding rate can explore other approaches, such as shorting term futures or lending BCH on the spot market.”
The price of BCH follows the general bear trend
At the time of writing, BCH is worth $348.31, in a dump of -6.7% compared to 24 hours ago and -7% compared to seven days ago.
The bear trend is somewhat marked by the drop in the price of the queen of crypto, Bitcoin, which is dragging the entire crypto market down, falling in price below $60,000 and now touching $58,000.
In any case, BCH is the sixteenth crypto with a total market capitalization of 6.8 billion dollars.
In the last 24 hours, the trading volume for BCH has increased by 111% to a value approaching 400 million dollars.