January Cryptocurrency Market Crash – The Investigation

The thread by riverflop on Reddit:

https://www.reddit.com/r/CryptoCurrency/comments/82ryay/ive_mapped_the_exact_time_when_money_was/

What is MtGox?

Mt. Gox was a Bitcoin exchange based in Shibuya, Tokyo, Japan. Launched in July 2010, by 2013 and into 2014 it was handling over 70% of all BTC transactions worldwide

In February 2014, Mt. Gox suspended trading, closed its website and exchange service, and filed for bankruptcy protection from creditors. In April 2014, the company began liquidation proceedings.

Mt. Gox announced that approximately 850k bitcoins belonging to customers and the company were missing and likely stolen, an amount valued at more than $450 million at the time. Around 200k were found since then.

The Mt.Gox trustees started selling that 200k BTC in order to pay
the users for the stolen Bitcoins in fiat.

MtGox selling Bitcoin

The selling of the Bitcoin took place from December through February. A total number of over 35K of Bitcoin was sold which doesn’t sound like a lot however suddenly increasing selling pressure like this can easily crash the market due to shallow market depth. Basically snowball effect.

The major sell offs came in 2K, 6K, 8K (twice) and 16K worth of Bitcoins. For example a sell of 8K BTC would reduce the price of BTC on Bitfinex to from 10K to 7K straight away. That doesn’t take into consideration any sudden panic selling from other users due to market crash.

Cryptocurrency markets are very fragile and any sudden trades of big volumes will have significant effect on the market.

Other reasons

Like I mentioned in one of the my previous videos Bitcoin grows in bubbles – there was crazy bull run in December which also increased the fear of bubble bursting. The MtGox selling basically gave an indication to many investors that the bubble burst and the selling started.

Once the initial crashes started people started to believe the bear market has began. Any futher MtGox selloffs made this theory more believeable. Every time there was a hint of good news the huge BTC sell offs meant there weren’t enough buyers and too many sellers which was decreasing the price further.

Other FUD didn’t help: Korea/China bans, Bitgrail NANO hack,
Coincheck NEM hack, Coinbase bug, Bitconnect scam,
constant Twitter scammers.

Will it get worse?

According to calculations done by riverflop MtGox owed creditors around $391 million and the total value of the sold BTC is around $405 million.Which could mean they have sold enough BTC to pay off the debt to creditors and won’t be selling any more BTC any time soon (They didn’t sell anything for over a month).

They still hold 166BTC which could demolish the market if they sold any significant amounts but they don’t need to sell so no idea what will happen with this Bitcoin.

The whole situation is a bit scary because it shows how single whale can crash the price however not many people can afford selling 80million in BTC so the risk of that is lo which is why I am optimistic.

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Love you but keep in mind that this is not a financial advice!t8mZ88

January Cryptocurrency Market Crash – The Investigation

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Kane Dane