Bitcoin
Gox Effect? Bitcoin (BTC) dominance rate records biggest drop in 5 months
Bitcoin (BTC) is generally less volatile than alternative cryptocurrencies (altcoins), but Monday was different.
The leading cryptocurrency took a bigger hit than smaller tokens, leading to a sharp drop in its market dominance in a compelling portrayal of apprehensions about the impact of the looming crisis. payments to victims of a 2014 Mt. Gox hack.
BTC dominance, or share of total crypto market value, fell 1.8% to 54.34%, the largest single-day percentage decline since Jan. 12, according to charting platform TradingView. In other words, investors likely pulled money out of bitcoin faster than their peers. The cryptocurrency’s price fell nearly 5%, reaching lows below $59,000 at one point, CoinDesk Data Show.
The liquidation was not without reason. News that the now-defunct cryptocurrency exchange planned to distribute 140,000 BTC to hack victims in July raised concerns that recipients would try to sell as soon as they received their payments, creating an oversupply in the market. This added to increased pressures since June 7 due to faster sales by miners and outflows from spot exchange-traded funds (ETFs).
Settlement concerns have driven demand for short-term BTC put options on the Deribit exchange, according to data tracked by Amberdata. Put options offer protection against price declines in the underlying asset.
The skews of the seven-day and one-month call options, which indicate how much traders are willing to pay to acquire an asymmetric payout in the upward or downward direction over a week and a month, have turned negative. This is a sign of renewed demand for put options.
Some observers, however, say the actual selling pressure of Mt. Gox’s refunds could be more measured.
“The exact amount of Mt. Gox funds to be distributed in July has not been specified, but is part of a larger repayment plan that includes 142,000 Bitcoin and 143,000 Bitcoin Cash, as well as fiat currency totaling 69 billion Japanese yen ($ 432 million), “said Tagus Capital in a note to the market.
“However, Mt. Gox’s creditors may hold onto their Bitcoins rather than sell them as they are long-term investors who have resisted previous offers of dollar payments and may face capital gains tax on sales,” said the Tagus Capital in a market note,” Tagus Capital added.