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Mt. Gox is a big reason for the Bitcoin price crash from all time high

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acidyo
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last yearBusy4 min read

Reading the crypto subreddits today I stumbled on a post showing new evidence of some of the Mt. Gox bitcoins having been sent off to exchanges and dumped there during the all time high of Bitcoin and all the way down to $6,000.

Now of course this may not be the only reason, many different things could have together resulted in the huge drop of price, such as Bitconnect, Futures, regulations and Chinese New Year which I've posted about before.

An article on trustnodes.com explains how the Mt. Gox trustee sold half a billion worth of both Bitcoin and Bitcoin Cash between December and February. The analysis of the blockchain data correlates well with price falls of bitcoin. The addresses of the bitcoins of Mt. Gox has been well known by detectives/analysts following the transactions from their root addresses.

The first sell of 2,000 BTC started on December 18th as the price was at $19,000 and that very same day dropped to $18,000 and continued to fall. 4 days later another 6,000 BTC were moved and dumped on the market bringing the price down another $2,000.

He continued selling of Bitcoin from January 17th to February 5th when the majority was sold bringing the price down to its latest low at $6,000.

A user by the name of riverflop on Reddit mapped the exact time when Bitcoin were transferred to exchanges. A total of 40,000 BTC was sold.

image.png

Here's source to all the transactions:

2017-12-18 2,000 BTC
2017-12-22 6,000 BTC
2018-01-17 8,000 BTC
2018-01-31 6,000 BTC
2018-02-05 6,000 BTC
2018-02-05 6,000 BTC
2018-02-05 6,000 BTC

As trustnodes.com stated, this is now the 4th time Mt. Gox causes the Bitcoin price to crash. First time in 2011 when the exchange was hacked out of half a million Bitcoin, second time in March 2013 when it was DDOSed, February 2014 when it went bankrupt and now late 2017-early2018 by selling 40,000 BTC.

People noticed that the equivalent amount in $ that was sold equaled the amount that Mt. Gox owed creditors at a price of $400 per Bitcoin. In another trustnodes.com article they included a PDF of the report (in Japanese) of the trustee acknowledging the amount of Bitcoin and Bitcoin cash to be 35,841 BTC and 34,008 BCH which means he probably did not sell all of the 40,000 seen transferred onto exchanges above and either left 4,169 btc on the exchange (which they believe to have been Kraken) or transferred them onto a new address.

If these Bitcoin are going to be returned to the customers that lost during Mt. Gox it is good news in general, we may not know how much more is going to be sold or what they will do with it at this time. The amount of Bitcoin left in the trustee is considered to be another 165,000 BTC currently worth ~$1.5 billion + an equal amount of BCH worth another $150 million.

The question remains why they didn't sell the coins off exchange such as auctioning them. It is clear as to why they did not announce the sale to not cause the market to panic and sell as high as possible. Rumors on Reddit are emerging though that the trustee or other people aware of these sells could've profited while selling by shorting Bitcoin on other exchanges such as Bitfinex, BitMex, etc.

Knowing a major reason to the huge correction from $20,000 feels somehow good for the future price of Bitcoin and other cryptocurrencies, we have to bear in mind though that the rest of their holdings are probably going to be sold at some point as well. It is unclear if that will happen, when it will happen and what effect it will have on the price at the time.


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