The “Tokyo Whale” recently sold $230 million in Bitcoin (and Bitcoin Cash), which possibly have caused recent price declines. The investor concerns about whether there would be a bigger sell-off. (Bloomberg)
Since the beginning of this year, the trustee of the cryptocurrency of the Mt. Gox exchange, which is no longer in existence, has been selling Bitcoin and Bitcoin Cash, $400 million worth bitcoin at the time. Since March, the Mt. Gox’s trustee Nobuaki Kobayashi has claimed that he had sold Bitcoin and Bitcoin Cash worth in $630 million, which has made investors to speculate that this had a direct correlation with market collapse.
However, the reaction of Bitcoin market to the recent sell-off did not much trigger big negative impact than in the past. The price dropped from 6,600–6,800 USD to the 6,450 USD (then Bitcoin price eventually had a little come-back, according to Bitcoin history price by Citicoins). In comparison to the previous collapse, that is a slight decline, so does the Bitcoin Cash price.
After the recent sell-off, Mt.Gox trustee Nobuaki Kobayashi said that he still had about $621 million in Bitcoin and Bitcoin Cash in his account, which means that future massive selling may lead to further decline in the cryptocurrency market.
Kobayashi explained in his trustee’s notice that he had established an independent trust fund in order to retain statutory funds to pay the debt of the bankrupt creditor. He also explained the hundred-million selling in the past year — he said it was necessary to obtain an appropriate amount of funds to secure the creditor’s interests and delay the loss of the determined and undetermined bankruptcy claims.
For creditors who want to repay the lost cryptocurrency in Mt. Gox by legit currency, the sell-off is pleased because it indicates the aftermath of economic loss is in process, which has begun in this June. However, investors feel uncomfortable that the remaining $621 million of bitcoin will be sold in the market, especially in the ongoing bear market, where Bitcoin adoption rate is noticeably decreasing.
At the time, the average daily trading volume of Bitcoin is around $4 billion (slightly increased during the price uptrend). Although a large amount of large sales becomes absorbed by the marketplace, a massive sell-off may downtrend the price, meanwhile, traders are caused to empty holds to prevent bigger loss, thereby to lower the price further, Furthermore, the other major coins such as Ethereum, were also affected, leading the entire market collapsing.
The timing the Mt.Gox decided to sell off has also affected to the past price trend. Assuming the market runs uptrend, the investors choose to buy in Bitcoins as when he choose to sell off, the negative impact is greater than the last market collapse.
Although the price decline should not be assumptively related to the sell-off time, it will exacerbate the market collapse, therefore lead to weak market and abandon, enlarging the decline.
Source:
Todd White, Tokyo Whale Sells $230 Million of Bitcoin in Mt. Gox Wind-Down Sep 25, 2018 (Bloomberg)
Data used for price & market analysis is collected from Citicoins.com