Bitcoin Cash Faces Selling Pressure Amid Mt. Gox Market Turmoil

Concerns that the selling pressure from bankruptcy repayments related to Mt. Gox could negatively impact the prices of Bitcoin and Bitcoin Cash are seemingly validated, according to a report from Kaixo Research.

Mt. Gox is set to return approximately $9.5 billion in Bitcoin to its customers, along with an additional 143,000 BCH, valued at roughly $73 million. This development has sparked uncertainty in the market regarding how many investors will choose to liquidate their holdings and through which platforms.

The report highlighted a noticeable increase in selling pressure on Bitcoin Cash, particularly on exchanges like Binance and OKX, prior to the formal announcement of repayments. This uptick was especially evident at the close of Asian trading hours on July 4. At around 9 am UTC on the announcement day, several sell orders were executed on Binance.

The effects on BCH’s liquidity became apparent, with price slippage for a hypothetical $100,000 sell order reaching its highest point in over a month across many exchanges. This indicates a decline in liquidity attributed to the lack of sufficient order book depth for substantial market transactions. The most significant slippage was recorded on Itbit and Bybit, with BCH slippage increasing from 0.2% to 2.8% on Bybit and from 0.3% to 3.5% on Itbit by July 5.

“Strong selling pressure linked to the Mt. Gox repayment situation has greatly affected BCH liquidity,” noted Kaixo Research. These liquidity challenges reflect the overall market’s response to the repayment announcement.

Once the leading cryptocurrency exchange managing more than 70% of Bitcoin transactions in its early days, Mt. Gox went bankrupt in 2014 following a hack that resulted in the loss of an estimated 740,000 Bitcoin.

The news of impending repayments has created additional selling pressure on Bitcoin and the larger cryptocurrency market, leading Bitcoin to drop to its lowest point in five months. This decline has resulted in over $580 million in leveraged positions being liquidated.

The trustee has approved several exchanges to facilitate the repayments, including Bitbank, BitGo, Bitstamp, Kraken, and the Japanese exchange SBI VC Trade.