Selling pressure from Mt.Gox

• In approximately July 24, Mt.Gox announces that it will begin redeeming Bitcoin in-kind. Prior to this, around May, 140,000 bitcoins were transferred from the Mt.Gox wallet.

• The market is nervous that 140,000 bitcoins will be released to the market gradually starting in July, stalling the Bitcoin bull run.

Selling pressure effect debate

• The selling pressure has been in the market for some time, but there is debate about how much more it will affect.

  • the actual impact will be less than expected

    • Mt.Gox gave creditors the option of cash or bitcoin liquidation, and the bitcoin being released now is from those who chose to liquidate their bitcoin, so few people will want to sell their bitcoin immediately.

    • These people are likely to be Bitcoin fundamentalists, as they've been buying and selling Bitcoin for as long as a decade. They're not going to sell their 10 years of Bitcoin overnight.

    • The market impact will be smaller because the Bitcoin payouts will be slow and spread out over four months.

  • The actual impact will be greater than expected

    • Above all, it is irrational to assume that people who have had their money tied up for 10 years would choose to hold on to even a fraction of an asset that has surged 100x or more rather than sell it.

    • The choice of liquidation method was only available for 22 years, and most people chose to liquidate their Bitcoin during a period when the price of Bitcoin was plummeting. In fact, most people chose to liquidate, and now that the price has almost tripled since then, there are more people looking to sell.

    • The fact that roughly 230,000 bitcoins have flowed into the spot ETF since its launch means that more than half of the upside could be counteracted by the downside.

Personal prediction

• Personally, I think the actual sell-off will be bigger than expected. Even if the bitcoin price drops a bit, people who have already realised more than 100x returns will not mind and will likely realise some profits.

• The question is, how much will they sell and how will the market react to it?

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Trading strategies

: Monitor the Mt.Gox wallet to see how much is actually distributed and how the market will react to it. If there is a large inflow of Mt.Gox liquidation to the exchanges and the price drops accordingly, bet on the downside. Otherwise, stay on the sidelines for now.

• Monitoring my Mt.Gox wallets: I currently hold Mt.Gox in 3 wallets

  • https://www.blockchain.com/explorer/addresses/BTC/16eAGJEjqsUqngMfcysQECvp7TMU37P9gX

  • https://www.blockchain.com/explorer/addresses/BTC/1AsHPP7WcGnDLzxW2bUa2FcbJP3eZVEqpx

  • https://www.blockchain.com/explorer/addresses/BTC/1HeHLv7ZRFxWUVjuWkWT2D5XFbXXvHoV68

• Market reaction and entry

  • Gradual entry on Bitcoin breaking $60k and falling.

  • Enter 50% before the previous short-term low of $57k and another 50% on the break of this low and further down.

  • Hold until the next support level of $50k

• Exit

  • Gradual exit on support at $50,000

  • Exit within 2 weeks of entry as the fear is likely to be concentrated early on

• Takeaways

  • Need to continue to monitor actual inflows and market reaction. If there is real inflow and a sell-off occurs, there is a very high probability of a pullback, but it may not be accompanied by a price drop if the market is overshadowed by other issues or if the market thinks the price is where it should be. In this case, my opinion is wrong and I need to follow the market's reaction.

  • Right now, my opinion is that the selling pressure on Mt.Gox is higher than expected, but as I said above, you don't need to predict the market's reaction to trade. It is almost impossible to predict the market, you have to read and follow the market's reaction.