- Huge oversupply from Mt. Gox, German government, and US government.
What we don’t know is:
- Actual sales time and sales quantity.
- How much of the Mt. Gox debt was sold over-the-counter in previous years.
- How much of that supply is expected to be sold and how much capital has been sold, shorted, or is waiting to be bought back.
What happens if, in the coming months, the amount of stranded capital equals or even exceeds the actual supply that enters the market?
No one knows what these flows will look like, but “sell after the Mt. Gox sell-off and buy now” seems like a crowded trade to me.
For reference, we saw billions of dollars of selling on the day the distributions were announced. Then add in the insider selling ahead of time, and it's easy to see that the market may have already priced these distributions in quite well to some extent.
Governments tend to be slow to sell. For example, the US government sold about 10% of its Bitcoin in 2 years. Honestly, I don't think they mind "holding" some Bitcoin because they don't seem to be in a hurry.
Finally, we know that at the end of last year, the price of SOL was expected to reach $3 due to a large oversupply. But a few months later, it went from $20 to $200. The market overestimated the actual impact of the oversupply and therefore got stuck, or in this case marginalized. Of course, this was due to the overall appreciation of the entire cryptocurrency market.
We don’t know what’s really going on behind the scenes, and it’s hard to guess future trends. Try to keep a clear head and don’t get too hung up on the headlines. The truth is often somewhere in between.
