CoinDesk reports:
The cryptocurrency market is facing its most severe headwinds in months as potential sales of Bitcoin (BTC) by Mt. Gox and the German government begin to weigh heavily on investors.
Observers are speculating on the next moves in prices, with some predicting that market conditions will only ease once selling pressures from Mt. Gox and Germany diminish.
Late Thursday, Bitcoin depreciated by 7%, dropping to a four-month low of $53,550, sparking a series of liquidations in the cryptocurrency market.
Following months of extensive preparations for fund distribution to creditors, Mt. Gox’s repayments are expected to commence in July.
Analysts interviewed by Decrypt indicated that sales of Bitcoin seized by the German government may already be underway.
Germany holds 50,000 BTC, valued at approximately $2.72 billion at current prices. Meanwhile, users of the defunct Japanese exchange Mt. Gox are awaiting restitution of funds lost more than a decade ago in a hack, totaling up to $7.7 billion.
While the exact timing of sales from Germany and Mt. Gox remains unclear, some believe that resolutions could alleviate selling pressures in the market.
Former blockchain solutions analyst and Unchained senior product marketing manager Joe Burnett stated in a post for X on Friday, “Germany selling 50,000 BTC is likely to mark a bottom. Announcing such a large sale is foolish and creates a reflexive feedback loop.”
Burnett’s theory suggests that large buyers may start lowering their bids to prevent Bitcoin prices from rising too high, potentially leading to further declines.
This scenario could persist until all Bitcoin is sold. He noted that post-sale, prices could stabilize or rise again.
Thursday’s market slump followed significant movements in Mt. Gox’s bankrupt estate cold storage after a major transfer on Thursday.
Rachel Lin, CEO and co-founder of decentralized derivatives exchange SynFutures, told Decrypt, “The selling pressure is unlikely to ease in the coming days.”
Lin mentioned that while the market anticipates most Mt. Gox users will sell tokens, a rebound could occur if sales volumes are lower than expected.
Lin added, “On the other hand, if there’s enough selling pressure to drive the price down, we might see levels around $50,000.”