Is the worst over for bitcoin?
…with Mt. Gox stating that the sell-off is over
Very recently, the price of bitcoin trickled down below $6k. While there has been a lot of speculation about the source of this bear market, it seems a huge impact is coming from Mt. Gox. For those who are quite new to the crypto world, Mt. Gox was a Japanese bitcoin exchange in the early days. Towards the end of 2013, it was hacked and about 850,000 bitcoins were stolen. This hack was responsible for the bear market that started in November 2013 and ran through 2014 plus even 2015 and 2016.
What does this have to do with bitcoin price? The price of anything is determined by the demand and supply. This means the point at which the seller is willing to sell and the buyer is willing to buy is the price. Market these days have gone global and so prices are determined by the second. Selling has a lowering effect on the price, meanwhile buying has an increasing effect on the price. So when bitcoin price goes down, it means selling outweighs the buying over the last couple of transactions.
When Mt. Gox was hacked in 2013, they held bitcoins for a lot of people. Those people lost their funds. And you know how that goes; it became a legal case. Apparently, a trustee had to take control of all Mt. Gox assets and start selling its bitcoin reserves gradually to pay back all its creditors. This sell-off reportedly started late last year. The fiat equivalent of the amount stolen is about $473 million as at when the hack happened. Today, the value is well above $5 billion.
In a statement on June 22, the trustee (whose name is Nobuaki Kobayashi) announced that Mt. Gox has formally entered civil rehabilitation proceedings. What that means (that concerns everybody) is that they will seize to stop selling bitcoins to settle creditors in fiat. They will settle creditors in bitcoins from now on. This means that the sell-off is over. However, some creditors will sell their bitcoins when they receive it. This will happen within early to mid 2019.
The sell-off by Mt. Gox is what has been themed to be mostly responsible for the bear market. And this is rightly so because of the large amount of bitcoins that is sold which gives the market jitters and causes other bitcoin holders to sell. If this is true, then $6k could be the very bottom of the bitcoin price. However this does not mean the bulls will kick in immediately and the price will start surging. The market is expected to stabilize over the next couple of days and weeks. And maybe we will see a gradual uptrend.