Mt. Gox Doomsday Scenario Involves Bitcoin Cash, Not Bitcoin: Analyst

Selling pressure from Bitcoin Cash (BCH) and lack of liquidity is the story to watch once Mt. Gox begins redemptions, writes Presto Research.

By Sam Reynolds

Mt. Gox's bankruptcy redemptions are bearish for BCH, not BTC, writes Presto Labs' Peter Chung.

Mt. Gox will send back to its former customers $73 million worth of BCH, worth over 20% of the token's daily trading volume.

Fears that selling pressure from bankruptcy redemptions from the estate of Mt. Gox will drive down the price of bitcoin (BTC) is unfounded, but it could be a bearish scenario for Bitcoin Cash (BCH), Presto Labs' Head of Research wrote in a note.

Bitcoin's price continues to dip below $60,000, with over $200 million in liquidations as the trading day began in Asia Thursday, CoinDesk reported earlier.

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Fears that selling pressure from bankruptcy redemptions from the estate of Mt. Gox will drive down the price of bitcoin (BTC) is unfounded, but it could be a bearish scenario for Bitcoin Cash (BCH), Presto Labs' Head of Research wrote in a note.

Bitcoin's price continues to dip below $60,000, with over $200 million in liquidations as the trading day began in Asia Thursday, CoinDesk reported earlier.

In addition to the roughly $9.5 billion in BTC the former exchange will send back to its customers, Mt. Gox will also send back 143,000 BCH worth around $73 million. CoinGecko data shows that Bitcoin Cash has a daily trading volume of $308.8 million, making this redemption worth around 24% of that number.

"Our analysis shows that the selling pressure for BCH will be four times larger than for BTC: 24% of the daily trading value for BCH vs. 6% of the daily trading value for BTC," Presto Labs' Peter Chung wrote in a note, pointing out that BCH's daily trading value is 1/50 of BTC.

In an interview with CoinDesk, Chung said BTC is projected to have limited selling because anyone who wanted out could have sold their claims on bankruptcy claim markets.$BTC