Bitcoin (BTC) has experienced a significant 15% decline over the past month, with many attributing this drop to selling pressures from bitcoin mining operators, Mt. Gox refunds, and recent sales by the German state of Saxony. However, Greg Cipolaro, head of research at NYDIG, suggests these factors have been overemphasized.
In a Wednesday note, Cipolaro argued that the short-term market emotions and psychology may exaggerate the impact of these potential sales. “Our analysis suggests that the price impact from potential selling may be overblown,” he wrote. Cipolaro acknowledges other possible influences but believes rational investors might see this as an opportunity amid irrational fears.
Recent weeks have seen investors fixated on bitcoin address transfers linked to the Mt. Gox estate, the U.S. government, and the German state of Saxony. Concerns arose over the potential sale of their combined stash exceeding $20 billion, approximately 375,000 BTC as of June 9. Cipolaro’s analysis indicates that even if these entities sold all their assets simultaneously, the resulting price drop would be less severe than the recent decline, based on Bloomberg’s transaction cost analysis (TCA) for traditional markets.
Cipolaro also dismissed reports that miners have been capitulating and selling their BTC holdings en masse following this year’s halving event. According to NYDIG’s data, publicly listed mining companies actually increased their bitcoin holdings in June. Although there was a slight increase in BTC sales last month, it remained below levels seen earlier this year and last year.
Cipolaro cautioned against interpreting blockchain data without understanding the context of transactions. “Identifying that bitcoins move to an exchange or OTC desk, even if done correctly, only tells us that coins moved,” he explained. “They could’ve been posted as collateral or lent out, not necessarily sold.”
This nuanced view challenges the narrative that large-scale sell-offs are solely responsible for Bitcoin’s recent price drop, suggesting a more complex interplay of market forces at work.
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