Bitcoin
Long Bitcoin (BTC), Short Bitcoin Cash (BCH) Will Benefit From Mt. Gox Refunds: Trader
Singapore-based trading firm Presto Labs is suggesting customers bet on bitcoin (BTC) strength and against bitcoin cash (BCH) in a market-neutral trade to profit from continued Mt. Gox payouts.
Hundreds of millions in BTC hit the market last week as now-defunct exchange Mt. Gox finally began its long-awaited refunds to creditors impacted by a 2014 hack. More than $73 million in BCH is set to be distributed to traders in the coming months, compared to $9 billion in BTC.
“Mt. Gox’s Rehabilitation Trustee plans to distribute several billion dollars worth of BTC and BCH between July 1 and October 31, 2024,” Presto market analysts led by Peter Chung told CoinDesk in a note Wednesday. “This could create a shift in the supply/demand dynamics in BTC and BCH during this 4-month period, potentially opening up a pairs trading opportunity.”
Pair trading is a trading strategy that involves buying and selling two financial assets simultaneously to profit from their relative price movements.
“Our analysis shows that the selling pressure for BCH will be four times higher than for BTC – i.e. 24% of daily trading value for BCH vs. 6% of daily trading value for BTC. Long BTC perpetuals paired with short BCH perpetuals is the most efficient and market-neutral way to express this view, barring funding rate risk,” Chung added.
CoinGecko Data shows that over $27 billion worth of BTC was traded in the last 24 hours, compared to $180 million worth of BCH.
Presto further assumes that investors who owned bitcoin in its early stages would likely be “wealthy Bitcoiners with diamond hands” and therefore more likely to keep some of their returns rather than sell the asset outright.
However, “100% will be BCH’s “much weaker investor base” that could see 100% sold off in the near term, Presto said.