Markets
Mont 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 was hit harder than smaller tokens, leading to a marked decline in its market dominance, convincingly portraying apprehensions about the impact of a looming crisis. payments to victims of a 2014 Mount Gox hack.
BTC’s dominance, or share of the total crypto market value, fell 1.8% to 54.34%, the biggest one-day percentage drop since January 12, according to charting platform TradingView. In other words, investors likely pulled money out of Bitcoin faster than its peers. The price of the cryptocurrency fell almost 5%, reaching a low of less than $59,000 at one point. CoinDesk Data to show.
The liquidation was not without cause. News that the defunct crypto exchange planned to distribute 140,000 BTC to hack victims in July reinforced fears that recipients would look to sell once they received their payments, creating an oversupply on the walk. This added to mounting pressures since June 7 due to faster selling by miners and outflows from spot exchange-traded funds (ETFs).
According to data tracked by Amberdata, sell-off fears have boosted demand for short-term BTC put options on the Deribit exchange. Put options provide protection against declines in the price of the underlying asset.
Seven-day and one-month call-put spreads, which indicate what traders are willing to pay to obtain an asymmetric up or down payment over a week and a month, have turned negative. This is a sign of renewed demand for puts.
Some observers, however, say the actual selling pressure from Mt. Gox redemptions may be more measured.
“The exact amount of Mt. Gox funds that will be distributed in July is not specified, but it 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), Tagus Capital said in a market note.
“However, Mt. Gox creditors may hold on to their Bitcoins rather than sell them, as they are long-term investors who have resisted previous offers of payment in USD and could face a capital gains tax on sales,” Tagus Capital said in a market note. ” Tagus Capital added.