Bitcoin faced challenges due to recent Mt. Gox repayments and market trends. However, this bearish behavior should not be seen as unfavorable.

Last week, Bitcoin (BTC) ended at approximately $55,850, marking an 11% drop from the previous week’s closing price of $62,775. The week experienced significant selling pressure, with BTC dipping to as low as $53,500 on Thursday before rebounding to $58,250 and finally settling at $55,850.

BTC Spot ETFs recorded $238 million in net inflows during this downturn. Cumulative trading volume since inception stands at around $315 billion, reflecting a decline in trading activity. This aligns with typical market behavior, as Q3 usually witnesses lower trading activity.

This data should not be seen negatively but rather as a seasonal trend, especially among traditional finance investors.

— Matteo Greco, Research Analyst at Fineqia International

Interestingly, the decline showed no correlation with BTC Spot ETF flows, a deviation from historical patterns where ETF flows significantly influenced price movements.

For the first time since their inception, there is a noticeable decoupling between price action and capital flows, indicating that recent price behavior has been driven mainly by trading activity within the crypto-native space.

— Matteo Greco

Mt. Gox Impact

The high on-chain selling pressure is partly due to the commencement of long-awaited Mt. Gox repayments.

Founded in 2010, Mt. Gox quickly became the world’s largest Bitcoin exchange. Its success was short-lived as it abruptly halted trading, shut down its website, and filed for bankruptcy protection in early 2014, revealing the loss of approximately 850,000 BTC due to thefts from its hot wallets over several years starting as early as late 2011.

Official confirmation of repayments, marked by the movement of 47,228 BTC from a Mt. Gox-associated cold wallet, has triggered market reactions. Additionally, after a recent halving that reduced mining rewards by 50%, miners’ selling pressure continues to affect prices, though it has decreased recently.

The recent drawdown has notably reduced unrealized profits, driven by long-term holders selling their coins. The MVRV ratio now stands at around 1.5, indicating an average unrealized profit of 50% among market participants, down from over 200% in March.

This trend suggests that recent price action was mainly due to long-term holders taking profits and selling their coins to new buyers at higher purchase prices.

— Matteo Greco

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