Bitcoin’s Price May Stay Low in September Due to Mt. Gox and U.S. Government
Bitcoin’s slow price movement might continue into September. Two big factors could add nearly $15 billion worth of extra selling pressure: the U.S. government and the defunct crypto exchange, Mt. Gox. This additional pressure could push Bitcoin’s price down even further.
The Threat of Additional Bitcoin on the Market
Over $14.8 billion worth of Bitcoin could soon hit the market. The U.S. government holds more than 203,000 Bitcoin, which is valued at $12.1 billion. Meanwhile, Mt. Gox is set to distribute another 46,000 Bitcoin, worth about $2.7 billion. This could flood the market with extra Bitcoin, causing prices to drop.
Will Mt. Gox Repayments Impact the Market?
Mt. Gox is expected to release $2.7 billion worth of Bitcoin before the end of 2024. This distribution will happen on the Kraken exchange, but experts believe it won’t cause a major market disruption. According to a report from Kaiko, Kraken has handled large amounts of Bitcoin before, with only minor increases in slippage. This suggests that any selling pressure from Mt. Gox’s Bitcoin repayments is unlikely to affect the broader market.
Mt. Gox Creditors and Market Behavior
Mt. Gox creditors have been waiting for over 10 years to receive their Bitcoin, which has increased in value by 8,500%. Despite this huge price rise, most Mt. Gox creditors haven’t sold their Bitcoin yet. For example, at the end of July, Mt. Gox distributed nearly $4 billion worth of Bitcoin, which was about 41.5% of what is owed to users. However, most creditors chose to hold onto their Bitcoin rather than sell it.
Glassnode, a crypto analytics firm, reported that many creditors decided to receive their payments in Bitcoin instead of fiat currency. This was a new option under Japanese bankruptcy law. As a result, it’s likely that only a small portion of these distributed coins will be sold on the market. Furthermore, the spot cumulative volume delta (CVD), which measures the net difference between buying and selling on centralized exchanges, hasn’t shown a big increase in selling on Kraken after the Mt. Gox distribution.
Bitcoin’s Price Struggles Below $60,000
Bitcoin’s price has remained below the important $60,000 level after falling more than 10.7% in August. To finish the month in positive territory, Bitcoin would need to close above $64,300. However, analysts warn that the lack of liquidity, a common issue during the summer, could continue into September. This might make it difficult for Bitcoin to break through the $63,900 resistance level.
Since 2013, Bitcoin’s average returns in September have been negative, at around -4.78%. This trend doesn’t offer much hope for a strong price recovery next month.
Bitcoin’s Recent Decline During U.S. Trading Hours
Recently, Bitcoin has been trending lower during U.S. trading hours. On the east coast, the price dropped back to $58,000 just before noon. Currently, Bitcoin is at $58,200, down nearly 4.4% over the past 24 hours. While this is better than the broader market, where the CoinDesk 20 Index fell by 5.6%, it’s still a significant drop.
Other cryptocurrencies, including Ether (ETH), Chainlink (LINK), and Cardano (ADA), have also seen declines. Solana (SOL) had the worst day, with its price dropping by 9%. Over the past month, Bitcoin has fallen by more than 12%, undoing the gains made in July. Ether and Solana have both dropped by 25% in August.
“Buy Asia, Sell the U.S.”
A familiar pattern has emerged: Bitcoin tends to rise during Asian trading hours but falls during U.S. trading hours. As crypto analyst Miles Deutscher pointed out, “Asia bids, America dumps.” Over the past two weeks, Bitcoin has gained over 5% during Asian trading hours but has shown negative returns during U.S. trading hours.
Possible Trend Changes Ahead
Despite positive factors like growing institutional adoption, a potentially friendlier regulatory environment, and upcoming Federal Reserve rate cuts, Bitcoin’s price is still down more than 20% from its all-time high of $73,500, reached over five months ago.
Bulls may find it hard to imagine what could turn around the current price action. However, things might get interesting when the U.S. returns from the Labor Day holiday. A new wave of economic reports could change the overall market picture.
Economic Data and Market Expectations
Next week, all eyes will be on the Nonfarm Payrolls Report for August, which will be released on Friday, September 6. The jobs report for July was weak and was likely a key reason why the Federal Reserve promised a rate cut in September. Right now, the market expects only a small 25 basis point cut in mid-September. However, if the August jobs report is also weak, investors might start expecting a larger 50 basis point cut. This could give a strong positive boost to risk markets, including Bitcoin.
On the other hand, if the September jobs report is strong, it might reduce the market’s hopes for easier monetary policy. Either way, we can expect some volatility ahead. There’s about a 50% chance that this volatility could be positive, which is about all that bulls can hope for at this point.
