Mt. Gox effect: Bitcoin dominance is at a 5-month low

BitcoinWhile (BTC) is often less volatile than alternative cryptocurrencies (altcoins), yesterday was not so much.

The leading cryptocurrency took a bigger hit than smaller tokens, with the 2014 Mt. Gox hack has apparently led to a decline in its dominance amid growing alarm over the impact of impending payouts to victims of the hack.

According to charting platform TradingView, BTC dominance, its share of the total crypto market capitalization, fell 1.8 percent to 54.34 percent, the largest single-day decline since Jan. 12. In other words, investors withdrew money from Bitcoin faster than their counterparts. According to CoinDesk data, the price of the cryptocurrency dropped about 5% and even fell below $59,000 at one point.

Of course, the sales did not happen for no reason. Reports that the defunct crypto exchange planned to distribute 140,000 BTC to victims of the July hack raised concerns that buyers would try to sell after receiving their payments, creating an oversupply in the market. This added to the selling pressure that has been building since June 7 due to rapid sell-offs by miners and outflows from spot exchange-traded funds (ETFs).

According to data tracked by Amberdata, selling concerns increased the demand for short-term BTC put options on the Deribit exchange.

The seven-day and one-month trading skews, which show how much investors are willing to pay to get an asymmetric payout on the up or down side over a week and a month, turned negative. This is a sign that demand for sales is revived again.

However, some observers believe that Mt. Gox says the actual selling pressure from refunds may be more measured.

Tagus Capital used the following words in its market note:

“The exact size of the Mt. Gox funds to be distributed in July was not specified, but 142,000 Bitcoin and 143,000 BitcoinCashas well as part of a major repayment plan involving fiat currency totaling 69 billion Japanese yen ($432 million).

However, Mt. Gox creditors may hold their Bitcoins rather than sell them, as they are long-term investors who have resisted previous offers for USD payments and may face capital gains taxes on sales.”

This article was first published on CoinDesk Türkiye.