Topic: Today (05/07) more than 3x of the BTC were sold than MtGox will pay out in July (Read 575 times)

Okay, so MtGox distribution is slowly going on, the LKA Saxony (generally referred to as "Germany" or "German BKA") has sold ~45000 coins (according to last data available on the Wall Observer, see here). And we've not seen lower lows.

Price is still a bit weak, but has recovered and even got several times above 59k, although the 60k region remains a resistance (until now). For me that's a good sign in general, the market is strong enough to digest these coins.

I agree actually with you @stompix about the difference if the coins are sold at 60k or 50k. Thus, the #GoxCoinPanic dump may have even a positive side: the impact on liquidity of the "real" Goxcoins is smaller than at 60 or even 70k.

I guess with the remaining Gox coins the "digestion" will be even better as I don't expect them to be sold in too large chunks, and much less in a few days like the LKA Saxony did.

Now you're talking!
There is only one small thing left, but that is out of reach for anyone unless they want to spend their days dealing with numbers, and it's the price per coin via transactions because it's a huge difference if 10k coins get dumped on 1 billion of liquidity at 60k or at 50k.
But anyhow, you're on a better path now than just volume!


Yup, complicated stuff, but it has to be complicated otherwise we would know the price of BTC exactly to the dime on the 15th of March 2178!
Liquidation volume is also a real mess, you can have billions caught with their pants down on a 5% drop or you could have anyone waiting on the side while a 20% drop begins.....
High volume, extreme volatility, and lower liquidations are usually a hint the market expected that!


Yeah...no!!! 
https://bitinfocharts.com/bitcoin/address/1HeHLv7ZRFxWUVjuWkWT2D5XFbXXvHoV68
From 47,228.73 coins  44,526 are still here!
https://bitinfocharts.com/bitcoin/address/16ArP3SPFJwq6X5fTZRLu2UcEAn1dXVqdF

and -2,701.78 have been moved back to:
https://bitinfocharts.com/bitcoin/address/1JbezDVd9VsK9o1Ga9UqLydeuEvhKLAPs6
The initial wallet!

Only  1,451 have been moved to an actual exchange:
https://bitinfocharts.com/bitcoin/wallet/51220325

I try to use another model and for me my point still on the whole holds, even with a larger number of coins "sold yesterday" (but it means something slightly different, see below).

I played a bit with the 5-minute candles on Binance of yesterday. If you aggregate green candles as "buys" and red candles as "sells", then regarding volume during the 7 hours of the main dump (~9.2% down from 58500 to 53800 between 7PM and 1AM UTC) then the relation between the volume of red candles and green candles was slightly above 2:1.

So we could guess: If we assume the rest of the day the relation between buys and sells was in equilibrium (the market moved largely sideways before and after the dump in a "stair" pattern, and a quick look at the candles seems to confirm that), then we had a relation of 1.29 to 1. This means: For each coin bought, 1.29 would have been sold.

Or in other words: 56% of the coins traded this day were "sold", 44% were "bought". The total volume were 912000 BTC, and 56% of these are thus around 510000. This means something slightly different as in the other calculation, because it includes the coins sold by short-term traders. We can paraphrase it to: 110000 coins more were sold than those that were bought.

Let's now go back to the Goxcoins. And let's assume the absolute worst case: all 140000 BTC are sold a single day. This means about 8 billion worth of USD per day are added to the sell side.

Let's assume that all other conditions stay the same - no more dip fishers, no more panicking weak hands. If we assume that at equilibrium (sideways market) we have a volume of 30 billion or 526000 coins on weekdays (1:1 relation), this would drive the volume from this "equilibrium" to 38 billion.

Yes, this would cause a quite big drop probably, because the relation between buy and sell orders would be a bit higher than yesterday's 1.29:1, it would be close to 1.5:1. Thus, I'd expect a dump in the region of 15-20%.

But the scenario is quite unrealistic, because MtGox distribution has already begun but only a fraction of the coins are paid out each day.

Where you're right is that in certain conditions a single larger dump can trigger other dumps, mostly when there's too much leverage in the market. However, afaik liquidations in yesterday's dump were only worth 600 millon USD, which were about 1.2% of the total volume.

But it's exactly this market dynamic people need to be conscient about. These dumps would be the result of either excessive greed (liquidations) or excessive fear combined with shorting. It's not caused directly by the supply surplus but by mass psychology.

Well today some were already distributed by MtGox ... and the price even recovered a little bit. The dump was earlier than the start of the BTC distribution, afaik. It came after the 47k coins were moved from the cold wallet.

That's exactly what I want to line out with this thread. If there is panic/FOMO, then the movements are probably much larger than as a consequence of a simple sequence of large orders. Of course this also works the other way around, that's why I'm actually less bullish than most about the ETF "inflows" and also about halving effects.

Should I get again the water bottles for the difference between volume and market depth? 

I told you the writing was on the wall, anyone going to Binance or Coinbase and looking at the pairs and the depth of buy orders could have seen what even some easily few thousands dumped would have done in the last days, it was a perfect market waiting for one small dump to trigger one three times the size.

Assuming the same order book and those two scenarios:
If 10 guys come and sell 10 BTC and 10 guys buy 9 BTC you have 190 volume and -10 BTC deficit with 100 coins dump.
If 10 guys come and sell 12 BTC and 10 guys buy 7 BTC you have 190 volume and -50 BTC deficit with 120 coins dump.

So rather than the weak hands, why not blame the disappearing into the void of the "cheap coins' gang?
Even the most perfect equilibrium needs just one tiny push at the right moment and it turns into chaos.


They didn't sell and we went to 53k out of sheer panic, what do you think will happen when they do?

Yeah, Mt.Gox only moved 1,500 BTC and German Government moved 4,000 BTC.

It's really far to hit 400,975 Bitcoin that has been sold today, I think people who sell that much are retailers who don't have any idea with Bitcoin, but they buy it since they think Bitcoin will double or triple their money in next few months.

Even both Mt.Gox and German Government dump all of their coins, it's not even enough to dump Bitcoin to $52K.

Today it was even worse: the trading volume was over 50 billion, and the Bitcoin price has lowered, so even if we take 57000 $ as the average price  (I guess it is actually significantly lower, i.e. more coins were sold) and 30 billion as the "normal" trading volume, then today 400975 BTC were sold! This is almost three times the 140.000 Goxcoins, and more than 6x the coins which will probably be paid out (to individual creditors).

And that only because Gox moved some coins, it actually didn't pay out anything. Yes, there was a movement of German BKA coins too, and it's possible that they were sold, but that was much earlier than the "big dump".

(Actually I should write that in some Asian language because the main dump occurred during Asian trading hours.)

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@X-ray: Somewhat I agree, for example when I read that "a hedge fund" published an "analysis" (citing two quite exotic indicators) that the "cycle top is already in", I asked myself: weren't hedge funds massively shorting Bitcoin these weeks? However, I think the #GoxCoinPanic is not the hedge fund's responsibility. All the time a lot of different, bullish and bearish, analysis are published, with obvious agendas.

It's weak hands, period.

I mean to be fair if the panic due to Mt.Gox already triggered such massive sell off, the event in which MtGox paid BTC is finally ready to sell gonna create bigger impact, the main factor that moves the market right now is always FUD and shill.

The big players know that they can move the market without capital just by fudding BTC with these news, the Mt.Gox sell off will have massive effect and create panic in the market undeniably despite the fact that market itself is kinda resilient to such sell off as shown from the current amount of sold BTC, The market definitely has the money to contain all those dumps but it's always the FUD that magnify the effect and some people just trying to find opportunity buying BTC at lower price after mt.gox sell off by selling it now kinda make it worse.

Yep but I was writing about July sales. These 11% haircut then could be redistributed later, but they don't count for July.

Regarding the rest of what Galaxy Research wrote, the logic I interpreted is of course that the distribution by the claim funds and Bitcoinica to their creditors should take longer than to be sold in July.

If you take all possible sales, then 140k is the worst case. But for the payments expected for July, I see no reason why a "realistic" worst case should be more than 65k. At least according to this source.

My conclusion is that we will have more "used to be frozen" Bitcoin circulating in the market which might inflict few damage in the Bitcoin price in short term especially if it coincides with a high selling trend, otherwise in the medium and long term, the return of investment of these coins will pay itself.

Yeah, sorry but lol, do these guys know how percentages work and how you should apply them at all?
Because if you take the first 75% of the creditors that would sell and then from this 75% you cut the 30k creditors will not sell, it doesn't make sense.

So it's not 140*(75/100)-30, and btw, 75% out of 140 is 105 not 95  , but rather (140-30)*75/100 which is 82.5 

Also, the 10% is shaved out of their initial claim, not out of the money that gets reimbursed. So if I had $200 my paycheck is $180, but that doesn't mean that if the trustee had $190 he will just pocket the change, whatever is over my claim will be redistributed to the ones that demanded a full paycheck, common, it's in the damn reimbursement plan!
All the money the trustee has will be reimbursed, there is no 10% cut just because some cashed in early, it just gets redistributed to the ones that didn't!

Furthermore, he says that those 30k will be delivered to other creditors, mainly Bitcoinica, well, I have news for you Bitcoinica is in liquidation and the other is owned by MGIF , you expect users with lost coins from 2013 to sell in only 75% but you somehow think guys who lost money in 2012 won't?

Also....the conclusion...

Nope, the worst-case scenario in which all creditors will sell is selling 140 000 coins!
The 65 000 is simply saying only 54% will sell, which is by no mean worst-case scenario.

I wish you were right about this one, but I clearly doubt you are. The reason is that people who are dealing with Bitcoin's intrinsic values are people who wish to do so, who have a genuine interest in complex topics in general. I found Bitcoin when I had to transfer larger sums of money from Germany to Switzerland during my studies while essentially  at the same time I was in California for a while studying "International Political Economy". In a research paper I was dealing with a certain angle that touched upon the power of currencies and intended interdependencies of goods/services + imports/exports and currencies. That's how I stumbled upon Bitcoin and then it made quickly sense to me why this thing exists and I couldn't stop researching it and I ended up writing a dozen of papers about it, including my final thesis (had amazing interview partners by the way: Mike Hearn, Ian Grigg, and several more). 

I doubt that many of those who are eager to speculate on bubble and casino like assets, are the type of people who eventually sit down and research that thing. Some yes, but I believe it is far, far less than 50%. One issue is that Bitcoin might be one of the most complex things I have come across in my life because it is extremely interdisciplinary and there is no limit to the depth and intensity of research you can do to understand it better and better.

But as you said, even the exaggerated down swings drew attention to Bitcoin in the past. More people got aware of it and when they something going down very quickly, it is at least in the back of their heads. Once they see it going up very quickly, they might take a shot at it, but not as someone who wants to understand Bitcoin. Only as someone who is hoping that +30% turns into +60% a day later.

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The number of people dumping from Mt. Gox will probably be pretty low and the link you shared has some good info about that. But given that Mt. Gox was pretty early days, many of the people who bought back then are more likely people who have a genuine interest in the technology and hence understand what has been built and grown ever since Mt. Gox went bust. Back then when they "lost" their Bitcoin, I am sure nobody thought that one day there would be Blackrock Bitcoin ETFs. Since we are now there, those who understand the technology probably suspect that this can go much further. This alone will lead most of these Mt. Gox "HODLers" (despite forced to... ) to not sell the majority if they can afford or reasonably justify in front of themselves to hold instead.

After all it is about "putting things into perspective". It would be good to have your info from this thread out in the open, so the sheep understand that the Mt. Gox thing is a drop in the ocean and no doom scenario. I can see the German "Bild" soon post a headline: "BEWARE BITCOIN HOLDERS: MT. GOX IS COMING". I guarantee it will happen!

Yes, about 140k. See also this post, so the likely "worst case" would be 65k Bitcoins sold approximately.

You're totally correct. And of course the same mechanism works also the other way around ... we had probably not been at $60.000 in February already if people knew how relatively reduced the direct US ETF impact in the market is. (It is significantly bigger than the Goxcoins and BKAcoins combined, and potentially much bigger in the long term, but "alone" the 250.000 BTC combined inflow - already taking into account GBTC of course - would not have caused the run to the new ATH.)

I think however posts like this one, "putting things into perspective" are useful to remind the community to be a bit more conscient about the actual magnitude of certain events. If we don't panic (and FOMO!) that much, then the Bitcoin adoption would be probably a little bit slower (because the FOMO/panic cycles are actually the reason for lots of users to enter, to try to "gamble" for a profit) but more healthy. If this has an effect on an even slightly smoother price curve (let's say max 50% bear markets instead of 70-80%, and 100% bull markets instead of 200%+), people would be associate Bitcoin less with a "speculation casino" and more for the intrinsic values like censorship resistance, and as a reliable store of value.

This is a nice observation that should help calm anyone that is panicking because of Mt.Gox payment that will supposedly happen next month even though no one is sure as it is not the first time repayment date have be fixed and it failed. However, I have some observations regarding your analysis. First thing is that my understanding of Volume is a composition of both buys and sells that happen in the market. If that be the case, even though you are right about the daily volume being higher than the amount the repayment of next month will inject into the market if everyone sold, this is not possible though, then the gap between both scenarios will be less than you stated.

Another thing is that the Mt.Gox refund will generate negative sentiment in the market and this will have a huge impact on the price that thrives on news. So, of there is a massive sell of, not only the recipient of the refund will but other weak hands might join with the intention of not being dumped on, although the overall effect is no enough to push price to zero but will just be a significant drop in price.

As for me, if the refund happens and price dumps, I will use it as a good entry point because the recovery will be fast and it will be a nice way to make good money.

Just to comment on the thought from the OP:

Thanks for putting things in perspective.
But that's sadly how the market works. You not only have to predict for the effect of a certain event, but also for the expected psychological one.
So even if one understands that the Mt Gox distribution is not a big thing, they might expect other investors to panic and still sell. Especially when all the media articles sound overly alarming (for more clicks) and don't provide a wider perspective (i.e. as done in the OP).
And, like it or not, whoever decided to sell after the Mt Gox announcement, made a good call, as the price went down by almost 7% in less than a day. Whether or not they bought back in at the bottom is a different thing.

It is by no means not the first time that there will be an impending event that can largely influence the btc market. But just like any other significant events in btc, we have seen that it may go down its price but it will recover again. Not to the point that it will go down to 0, I don't think that's gonna happen.

We have seen a lot of roller-coaster rides in this market, and yet, btc remains its top position. The decline will always be there as just any other market. But it always recover its position because the foundation is quite solid already.

Could be, but I think it's just one of the factors.
Having pull-backs at this stage of the 4-year halving cycle is nothing unusual. On top of that, summertime historically isn't the best period for growth (be it for crypto or traditional markets).
But if this was a major factor for the recent price drop, I think it would be priced in by now.


Thanks!
Given most of their creditors are Bitcoin early adopters, I can't imagine all of them rushing to sell all of it. But there will be some additional sell-pressure for sure.

Nice finding, interesting. Even though I suspected it is probably as you described, even better to have it laid out by someone.

140,000 GoxBTC are there in total, correct? And this doesn't mean that all of these would be sold in July. Or did I miss some news here? I know this is like throwing a dart blindly, but my guess is that less than half would be sold. If I own 100 Bitcoin from Mt. Gox and I receive them in July and bought them for literally nothing back at the time, I wouldn't sell all of them. If it is life-changing money, I would definitely sell some. But the industry and the entire market has become so enticing that I would make sure I stay in the market with a significant portion of my holdings. How lucky can you get to get robbed off your coins, couldn't sell them at 1k, 2k, 10k, 30k, 50k, etc. Now they get their coins and there are certainly some people going to sell. But those who hold like more than 10 or so, I don't think they will sell off in one move.

But as we know, it is all about herd behavior and it could indeed frighten the market for a little while. But recovery will happen for sure and I believe the buyers of those Mt. Gox Bitcoin and those that dump along with those Mt. Goxers, consider this a temporary discount.

This type of thing is the reason why I never worry about the future because while it is of course sad to see a possibility of bulk sales, it's also a real thing that we are talking about bear periods in crypto that are much worse than any of this. Remember, we were at around 69k or so in 2021 peak time, and then dropped as low as 16k, nothing in the world even if the worst thing could happen, won't make it drop that much, and only the bear period can do that.

It all means, today, mtgox or any other bad thing you can think of, they would all make it drop a bit that's true, but not as bad as the bear period. But have we recovered from the bear period? We have, we went back to 70k+ and broke a new all time high, so do not have any worry.

Well, from what I read in the last week about the issue, the following amounts are expected:

- About 95.000 BTC could be redistributed "early", i.e. during July, according to Alex Thorn from Galaxy Research.
- Also according to Galaxy Research, from these 95.000, 30.000 would go to claim funds and Bitcoinica BK. These are unlikely to be sold.
- So there are 65.000 BTC which could, in the worst case, be sold during the month of July, if all MtGox creditors sell 100% of what they get. That's about 4 billion USD - about 20% of a "normal" daily trading volume like today (22 million according to Coingecko).

In this article some more details can be seen.

If only people stand their ground, anticipated dips like when Mt Gox starts paying their creditors would have been avoided. The problem with many is that they're too fearsome. They're imagining too much. So instead of supporting Bitcoin and continue to hodl to somehow act as shock absorber or to damage control the Mt Gox payout, they themselves cause a self-prophecy. There is a dip because everybody was selling because a dip was expected. As a result dips happen even before the anticipated dips.