A zoom on its price chart reveals that it might be forming a bearish flag pattern. The likelihood of this outcome is enhanced by a potential selling pressure of $3 billion in Bitcoin.
Previous bitcoin crashes have been highlighted by major events like “back swan“. These include the Terra Luna and UST crash in May, as well as the 3AC debacle in June.
Bitcoin has been under heavy selling pressure over the past few months, due to the SEC’s quantitative easing plans. The ensuing decline was exasperated by heavy liquidations of highly leveraged positions.
Is the next crisis coming soon?
If bitcoin’s rise since mid-June sees the market see further decline, heavy selling pressure could trigger a major drop. It turns out that there is an upcoming event that could cause around $3 billion in selling pressure in the next few weeks or days.
It is expected that around 137,000 bitcoins recovered from Mt. Gox will soon hit the market.
Given the long duration and strong growth that has taken place since the Mt. Gox hack, it’s likely recipients will want to sell.
In just a few weeks
137,000 #bitcoin will be returned to Mt. Gox investors.
Original price per coin: $483
Current price per coin: $24,000 (50x return)
Current total value: $3.3 billion
How many of these original investors sitting on a 50x profit will sell? pic.twitter.com/uWeTFzS9I7
— Colin Talks Crypto – CBBI.info (@ColinTCrypto) August 16, 2022
Such selling pressure can also trigger a cascading panic effect. This would cause a major collapse. The actual timing of the release is still unclear, but the custodian in charge of the 137,000 BTC recently received regulatory approval.
A recent report from cryptoQuant revealed that a wallet linked to Mt. Gox just moved 300 BTC for the first time in nine years. This sparked speculation that this is a sign that BTC MT GOX is about to be released. However, no activity has been observed on the Mt. Gox balance metric so far.
Notably, an increase in short position liquidations has been observed over the past two days. This suggests that there are a large number of short positions at the current level.
This is because another black swan event will be a lucrative event for short sellers.
Futures open interest also increased despite a slight fluctuation between August 23 and 24. This may include forward betting against the upside.