On Thursday (July 4), Bitcoin plummeted below $58,000, hitting a low of $57,890. In the past 24 hours, the cryptocurrency network has lost $220 million. Charles Edwards, founder of Capriole Fund, believes that the reason for the decline is that Mt.Gox has initiated creditor repayments.

As Bitcoin is repeatedly washed out, according to CoinGlass data, in the past 24 hours, the total amount of cryptocurrency liquidations exceeded US$220 million, with long positions accounting for US$200 million, and nearly 90,000 people were liquidated.

In response to the short-term plunge in the market, Charles cited the on-chain changes of Bitcoin in his tweet and speculated that the main reason for the decline was most likely because the exchange Mt.Gox had begun to repay the Bitcoins of creditors, thus triggering market selling pressure.

He further explained: “This chart will surprise you and hit you over the head. The chart shows that a large amount of Bitcoin has been transferred on the chain, 10 times higher than the previous high, up to $9 billion. But who is transferring it? Mt. Gox. It seems that they have started to repay.”

Mt.Gox was once the world's largest Bitcoin exchange, but was hacked in 2014 and 850,000 Bitcoins were stolen. Now, after 10 years of bankruptcy litigation and several delays, compensation is finally being paid. It is expected that before October this year, Mt.Gox will pay 142,000 Bitcoins and 143,000 Bitcoin Cash (BCH) to creditors.

However, Alex Thorn, head of research at Galaxy, previously commented that he believes that the ultimate selling pressure on Bitcoin caused by Mt. Gox will be lower than expected. He explained that since nearly 75% of creditors chose to pay compensation early (Early Payout), they must accept a 10% reduction in value, so only about 95,000 Bitcoins will be used for early payment compensation, and the remaining Bitcoins will take longer to pay.

Of these, approximately 20,000 tokens belong to the claims fund, 10,000 tokens belong to Bitcoinica BK, and approximately 65,000 tokens are owed to individual creditors.

He expects individual creditors to hold on to their bitcoins longer than the market expects. Creditors are mainly long-term bitcoin holders who are early adopters of the technology. Individual creditors have rejected attractive offers from claims funds over the years, suggesting that they want their bitcoins back more than compensation denominated in U.S. dollars. The capital gains tax impact of the sale will be large, and as prices rise, even if only 15% of the actual value is recovered.

property claims, but claim holders have made 140 times the value of the Bitcoin they recovered since the bankruptcy.

In summary, he believes that the selling pressure on Bitcoin will not be greater than investors imagine. However, Bitcoin Cash may experience a more serious decline due to its low liquidity.

According to data from the on-chain data monitoring platform Arkham, the bitcoins in the Mt. Gox wallet have not yet moved, so it remains to be seen whether Mt. Gox has started repayment as Edwards said.

Bitcoin Technical Analysis

CMTrade said that Bitcoin RSI is below the neutral zone of 50, MACD is above the signal line and is negative, and the configuration is mixed.

Moreover, the price is trading below the 20 and 50-period moving averages, which are $60,232 and $60,913 respectively.

Finally, BTC/USD is trading below the lower Bollinger Band at $59,860.

“Our pivot is $59,100 and our preference is for a rally to $61,470.”

“The alternative is below $59,100, with $58,250 and $57,750 expected to be tested.”