Bitcoin Twitter is in a frenzy about Mt. Gox rumors, as the price of Bitcoin falls below $20,000

By: Dickson Arinze

August 28, 2022 5:56 AM

As BTC price volatility resumes, claims that 137,000 BTC are about to be sold on the open market are viewed with great skepticism.

On August 27, Bitcoin (BTC) failed to hold the $20,000 level as concerns about a sell-off by Mt. Gox consumers increased price pressure.

1-day candle chart for BTC/USD (Bitstamp). Via the TradingView

Rumors about Mt. Gox are brushed off as "normal crypto."

BTC/USD reached $19,766 on Bitstamp as it headed to new six-week lows, according to data from TradingView.

The already unsteady markets responded negatively to unfounded allegations that Mt. Gox funds were scheduled to be released to creditors on August 28 due to thin weekend liquidity.

At the time of writing, there were many different claims. Some people thought that a tranche of 137,000 BTC was going to be released all at once. Others said that payments would start this weekend even though money would be distributed in bits and pieces.

A moment of agreement was reached when it was claimed that creditors wanted to sell BTC that was owing to them; this had been out of reach since 2014, when BTC/USD traded for less than $500. They worried that the unrealized 40X returns would tempt creditors to act as willing hodlers.

Nearly ten years ago, Mt. Gox collapsed with hundreds of thousands of bitcoins. The designated rehabilitation trustee, Nobuaki Kobayashi, declared on July 6 that he was "preparing to make reparations" to creditors after a drawn-out legal process involving money later recovered from the exchange.

Kobayashi listed "the end of August" as the reference date for when the initial payments might start in the papers from the time.

"Following talks with the Court and in accordance with the Rehabilitation Plan, the Rehabilitation Trustee intends to set the Assignment, etc. Restriction Reference Period from roughly the end of August this year until all or part of the repayments made as initial repayments is finished for safe and secure Repayments," according to a portion of the document.

The reason for the sell-off rumors' rapid spread was still unknown, despite no fresh official information surfacing on the website dedicated to the rehabilitation proceedings.

Josh Rager, a trader and analyst, believes that even if all of the BTC were sold at once, the subsequent selling pressure would not result in the kind of cataclysmic scenario that some have predicted.

Weekend volatility squeezes profits.

However, the most recent losses caused existing BTC hodlers extra suffering.

Data from on-chain analytics company Glassnode shows that on the day, at slightly over 55%, the fraction of the total BTC supply that is in profit hit a one-month low.

While this was happening, older coins continued to exhibit rising dormancy, with the proportion of the supply that hasn't left a wallet in at least two years reaching ten-month highs.