Bitcoin ($BTC) recently made a modest recovery to $63,579 last weekend, a 5% increase that partially offsets June’s losses.
Despite this, investor sentiment towards the top coin and the broader cryptocurrency market remains cautious.
A significant upcoming event that might further impact the market is Mt.Gox’s upcoming $9 billion repayment
Investors are wary of a potential major liquidation that could ensue once the now-defunct exchange starts distributing recovered tokens.
The prominent crypto exchange that went bankrupt a decade ago following a significant hack, will reportedly begin compensating its creditors this week.
These creditors, who have been waiting for years, will receive about $9 billion worth of Bitcoin at current prices.
The saga began in 2011 when Mt. Gox lost around 950,000 Bitcoins to a hack. With Bitcoin valued at $32 per $BTC at the time, the loss was substantial.
About 140,000 of those coins were later recovered, now worth around $9 billion.
From July to October, Mt. Gox creditors are set to receive 142,000 Bitcoins. Although the deadline for distribution is October, JPMorgan analysts believe most repayments will occur in July.
A potential market pressure
With some Mt. Gox creditors selling part of their Bitcoin receivables this month, JPMorgan analysts believe that it could potentially pressurise the crypto markets initially.
This expectation is supported by a slight decrease in JPMorgan’s Bitcoin futures position indicator based on CME futures.
The indicator suggested that mainly retail customers, not institutional investors, have been selling off crypto holdings recently.
Looking ahead, analysts expect a market recovery starting in August, partly due to upcoming cash repayments from another bankrupt crypto exchange, FTX.
FTX will also repay its creditors in cash, estimated between $14 billion and $16 billion, following the final approval of its wind-down plan on 7 October.
These funds could support the crypto markets if crypto-native creditors reinvest their repayments into digital assets.
Bitcoin breaks $63K barrier
Over the past weekend, $BTC experienced a significant rally, pushing its price above $63,000, a 5.6% increase from a low below $60,000 on Friday.
This unexpected surge, occurring despite a lack of major news triggers, has led to various speculations and analyses. Three key factors might explain this price action.
Firstly, according to DeFi^2 (@DefiSquared), a prominent trader on Bybit, a mysterious “whale” has been active in the Binance perpetual futures market. DeFi^2 observed significant buying activity from this entity, stating,
“Since the local BTC lows on Friday, almost the entire bounce this weekend is from a single entity on Binance Perps that has hammered over $450 million in buys in 500 BTC blocks at a time during the lowest liquidity hours of the market”.
Secondly, crypto trader Daan Crypto Trades (@DaanCrypto) highlighted the relationship between open interest and market price, a critical indicator of market sentiment and potential future volatility. He noted,
“During this run up, we’ve mostly seen Open Interest rise with a few relatively small short squeezes and some long profit taking in between. I think there’s a lot of underwater shorts from the ~$60K region that should get squeezed out if price were to keep grinding higher. That $65K region is still a big area to watch out for.”
Open interest on Bitcoin increased from $30.97 billion on Saturday to $32.21 billion by Monday, according to Coinglass data.
Lastly, a technical breakout for Bitcoin likely contributed to the market momentum shift.
Popular crypto analyst CRG (@MacroCRG) described the weekend’s price movement as a “beauty of a breakout”, highlighting that both funding rates and the perpetual futures basis remained flat, which usually precedes a strong market move.
The $BTC weekly close presented a significant bullish signal—a large pinbar candle with an 8% wick—indicating potential for upward movement.
At the time of writing, the top coin maintained the bullish momentum by trading in the green on its charts, changing hands for $63,210.
