25th June 2024 > > BTC price action.

tl;dr

The price of BTC continues to look a little vulnerable, in the short-term.

Market Snap

Market Wrap

BTC dropped to just below $59k yesterday evening following the news from Mt. Gox (see below) adding to the potential selling pressure from miners, from spot BTC ETFs, from the German government, and from all the speculative weak hands who shouldn’t have got involved in the first place.

So, is this it? No-one can accurately answer that question except with hindsight, but I remain relentlessly positive. See below for more details.

Curious Cryptos’ Commentary – Mt. Gox

Mt. Gox was a centralised cryptocurrency exchange that once handled 70% or more of all BTC transactions, which means 70% of all crypto transactions given the very small number of alternatives. XRP is the only I know of but there may have been others.

The crypto world was a very naïve place at the time. Neither Trezor nor Ledger hardware wallets were available. A software wallet was released with the launch of BTC but I believe it was complex and clunky to use. Blockchain.com launched its functional wallet in 2011. By the time of my first crypto transaction this wallet was fine but a lot of investors took the easy route to keep their crypto holdings on the largest exchange, Mt. Gox.

From 2011 to 2014, BTC was stolen from the Mt. Gox hot wallet. At first it was believed that 850,000 BTC (now worth $51bn) had been lost, until an old wallet that had been used when the exchange was first launched was found to hold 200,000 BTC. Quite how one forgets about an old wallet is beyond me, but I guess it happens.

In early 2014, Mt. Gox filed for bankruptcy, a process which is now almost complete. Last year it was announced that the distribution of 140,000 BTC would begin in October this year.

Then a strange thing happened yesterday. A missive was sent stating that the payout was to be brought forward to July:

https://www.mtgox.com/img/pdf/20240624_announcement_en.pdf

If you read that statement, it sounds eerily like the sort of thing that scammers send out. I guess it isn’t, as it hasn’t been denied by the trustees to the bankruptcy, but it is all a bit odd.

With $9bn of BTC potentially suddenly available for sale in a week, BTC took an immediate battering.

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But the world hasn’t really changed. These BTC were always going to be released this year, and that fact was already in the price.

Also, by definition, all the holders are early-adopters, familiar with a new product largely hidden from the mainstream news. The investor profile undoubtedly reflects a degree of nerdiness, and an embrace and understanding of the concept and opportunities proffered by the decentralised world.

Will these people simply just sell? I have my doubts.

Curious Cryptos’ Commentary – Price action

Notwithstanding all of the headwinds identified in the Market Wrap, there are plenty of reasons to remain bullish, and strongly so.

Prices never go in a straight line. As Milk Road helpfully reminds us, all bull markets in cryptos have been punctuated by frequent and deep drawdowns. For the bull market ending in October 2021, there were NINE instances of a material drop in the price of BTC:

Look at some of those numbers: -53%, -63%, -31%, -55%, and so on. The current drop of just 20% from the new ATH set in March this year is but a flesh wound, and it won’t be the only one.

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In one of the many crypto chats/groups/etc that I spend much of my time in, this handy price analysis was published:

This is a rare situation. Alts are a high beta play highly correlated to the price of BTC. To see alts up whilst BTC is down does not suggest risk aversion, quite the opposite.

If alts are bullish, I am bullish too.