What happened to the Bitcoin price?

What happened to the Bitcoin price?

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Bitcoin was sailing higher on Wednesday when suddenly there was a strong pullback. News of Mt Gox and the US Government moving their BTC caused panic selling.

A topsy-turvy day

The day had gone well as Microsoft earnings came in much better than the market had expected. The Nasdaq had risen on the news and this possibly helped the bitcoin price to rise strongly around the middle of the day.

The price touched $30,000 and then started to take a breather and go sideways for several hours. However, around 8pm BST the price dropped fairly dramatically, plunging nearly 7% over the next hour down to $27,700.

The BTC price continued to fall, and got right down to strong support at around $27,250 before bouncing robustly back above $28,000. Since then the price has recovered to hover at $29,000. What caused this seesaw action?

What caused the seesaw price action?

It appears that what caused all the initial panic was a tweet from the db Twitter account stating that an Arkham Alert had triggered, suggesting that Mt Gox and the US government were moving their BTC.

Panic ensued and the long positions that had opened on the good earnings news were instantly liquidated. Open interest for BTC tanked 11% over a 4 hour period and $277 million was liquidated over 12 hours.

However, the alert turned out to be false and as soon as the market realised this the price whipped back up in the opposite direction, wiping out those who had jumped in to short the dump.

So the fact was that Arkham had fixed a bug which had led to all the panic and confusion. So this begs the question, what will happen when Mt Gox and the US government do sell their Bitcoin?

The Mt Gox/US gov sell overhang

The Mt Gox Bitcoin holding amounts to 142,000 BTC. October 30 2023 is the deadline for distribution of this amount. The deadline has been moved back a few times already, so it would not be surprising if it was put back again. Nevertheless, staggered payments are potentially going to be made leading up to October or beyond.

The US government still has 41,000 Bitcoin. It sold 9,800 in March and the bitcoin selling pressure was absorbed relatively easily by the market. According to the US government, the remaining BTC is to be sold in four tranches across the rest of this year.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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