If it falls, where will the selling pressure from Mentougou cause BTC to collapse?
Let’s look at the data first:
Mt. Gox holds 141,686 BTC, which is 0.72% of the total in circulation and worth about $8.54 billion. It sounds like a lot, but how much impact will this selling pressure have?
In horizontal comparison, how much has the inflow of Bitcoin ETF caused Bitcoin to rise? And how much will the selling pressure from Mentougou cause Bitcoin to fall?
analyze
The total asset management scale of Bitcoin spot ETF is $50.36 billion. As of now, GBTC has a total outflow of BTC of $18.86 billion (possibly due to the high handling fee of GBTC, the outflow may be exchanged for $IBIT. We assume that the outflow of GBTC is exchange flow)
$50.36 billion - $18.86 billion = $31.5 billion
But this may also include hedging/options/hedge transactions, etc.
According to CME data and analysis of ETF holders, approximately $10.5 billion of inflows were related to hedging/options/hedge trading;
$31.5 billion - $10.5 billion = $20.5 billion
The actual net inflow is about $25 billion.
On January 11, the U.S. Securities and Exchange Commission (SEC) approved the Bitcoin spot ETF, and the ETF began trading. The price of Bitcoin soared from $41,700 to around $72,000, a 360% increase.
That is to say, the Bitcoin ETF used $25 billion to push Bitcoin to 72,000, and the ETF inflow was $25 billion/Mentougou paid $8.5 billion = 2.9 times.
The actual calculated ETF net inflow is more than three times higher than the Mentougou compensation. When you hear and see this, doesn’t it seem okay?
Early holders profit
Some people say that the creditors of Mentougou are all old OGs, so the pressure to sell will be small. But if you suddenly get a windfall, what would you do?
According to cost calculation, when Mentougou went bankrupt, the price of BTC was US$485.
The original creditors now have a profit of 120 times; the amount of BTC compensated is about 20% of the original holdings, and the profit is about 24 times.
The returns from debt acquisition are also more than 10 times. Referring to the bankruptcy of SOL and FTX, in theory, debt acquisition institutions hold more BTC, and they are long-term holders.
During the 10-year litigation process, many original creditors sold their claims to more creditor institutions at a discount or low price.
Compensation details
Mentougou Exchange can only compensate creditors for about 23.6% of their original claims. Creditors who choose to receive a lump sum compensation in advance will receive a compensation rate of 21%; you can also wait and may get more or less.
It is not yet known how many people have chosen to make early compensation.
The compensation assets are divided into two parts. One part is cash (sourced from the BTC sold by the Japanese government at a high price in 2017), accounting for 5%-10%;
The other part is BTC, accounting for 90%-95%. Most of the compensation is paid in BTC
We don’t know how many creditors will choose to pay in advance. In order to analyze the event fairly and reasonably, let’s look at the German coin sales data:
(PS: Currently sold out in Germany, without us even noticing)
Germany sells coins
The German government has sold 50,000 BTC since June 19.
About 43,700 BTC worth about $2.4 billion were sold in 23 days, with the largest daily drop of about 19% (from 66,400 to 53,500).
The biggest one-day drop occurred on July 5. On that day, Mentougou also transferred 47,000 BTC (only 1,500 entered the exchange). Under the double panic, BTC fell to 53,500, a one-day drop of 8.5%, which is also the position of my FIb 0 axis.
Subsequently, until July 12, the German government continued to sell coins, but ultimately the price failed to fall below $53,500.
Combined with the German government's sale of coins, it can be seen that the market's panic about the decline in selling precedes the actual sale of tokens.
-19% is the largest drop under the dual stimulation of Germany’s coin selling and Mentougou’s compensation. The entire cycle of Germany’s coin selling was about 28 days, which means that within 28 days, the market had digested the selling pressure of these 50,000 real tokens.
In 28 days, the maximum drop was -19%, with a total of 50,000 BTC.
Next let’s see how long it will take for Mentougou to pay compensation?
Selling pressure time
Regarding the compensation time (the time it takes for BTC to enter the market), it will take two to three months.
A total of 5 exchanges accept BTC from Mt. Gox:
Kraken takes 90 days, Bitstamp takes 60 days, BitGo takes 20 days, SBI VC Trade and Bitbank take 14 days to complete the payment.
It is worth mentioning that the above is the deadline for early lump-sum compensation, which is October 31, 2024. Unless approved by the court, this time will not be modified.
We mentioned above that if the compensation is not paid in one lump sum in advance, the user can wait and he may earn more or less.
From this point of view, the amount of BTC in Mentougou is three times that of Germany, but the compensation will take three months or even longer, and during this period some users will choose not to pay the compensation in one lump sum, etc.
Take Germany as an example. Think about how long it has been since you heard anyone mention this in the market. You may not even know that it has been sold out, right?
I really think there is no need to panic. Every decline is our best opportunity to get on board!
The bottom is copied! Let's see how Western funds bought in one after another during the period when Germany sold coins! At this point, we have to mention the buying of Bitcoin ETFs!
BTC ETF Buying
During the German government's sell-off, the net outflow on a single day was greater than the net inflow. In just 5 trading days, the rest were buys > outflows! The market votes with money, and with such a perfect answer, are you still not satisfied?
The German government sold about 50,000 tokens, about $2.4 billion, during the period. Demand was less than supply, so the market fell during the period when Germany sold coins.
in conclusion:
If the compensation from Mentougou is sold in three months or longer, the selling pressure faced by the market will be very similar to the German government's selling, with the amount and time of selling being similar. According to the current supply and demand of ETFs, it may not be enough to take over, and the price of BTC may fall further.
If the compensation of Mentougou lasts longer (more than 3 months), the amount of BTC entering the market every day will not be too large, and it will not cause a one-time drop!
However, due to the continued expectation of selling pressure, there may be a period of volatility to digest the selling pressure, which also means that it is difficult to have a big rise in the short term.
At present, most BTC is still in the Mentougou account, and the actual selling pressure has not yet entered the market. When a large number of BTC in Mentougou is distributed to several exchange addresses, it may trigger a panic drop and form a plunge.
When specific individuals sell, they may not necessarily cause a significant drop in price because they are scattered and difficult to observe.
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