$6B Outflows from Mt. Gox Cold Wallet Triggers 3% Bitcoin Price Drop

The crypto market, Tuesday, at the time of writing, witnessed a 3% ($65,000 to $63,900) dip in Bitcoin’s (BTC) price, reportedly caused by a fresh fear, uncertainty, and doubt (FUD) related to a massive $6 billion outflow from the cold wallet of the infamous, now-defunct exchange, Mt. Gox. This has led to a $13 million in liquidations, per Coinglass report.

BTC/USD 1-hour chart. Source: TradingView

Details of the Mt. Gox Cold Wallet Movement 

Mt. Gox, once a major Bitcoin exchange, collapsed over a decade ago after a massive hack in 2014. Since then, the exchange has been undergoing rehabilitation proceedings, aiming to repay its creditors. On July 16, data from crypto intelligence firm Arkham revealed that 91,755 BTC flowed out from Mt. Gox’s cold wallet to four unknown addresses. This movement amounted to approximately $5.8 billion, constituting around two-thirds of the exchange’s total holdings.

Mt. Gox moved 44,527 $BTC(2.84B) to an internal wallet 5 minutes ago, which may be preparing for repayment.#MtGox currently holds 138,985 $BTC($8.87B).https://t.co/f2q66eQNuk pic.twitter.com/JlqkZdzkPC

— Lookonchain (@lookonchain) July 16, 2024

Although Tuesday’s sudden outflows from Mt. Gox isn’t the first of its kind, it has raised fresh concerns among investors. Would this massive BTC movement lead to a flood of sell orders? Some feared that the market might experience a downward spiral due to the impending distribution of refunds to original creditors. However, not everyone shared these apprehensions.

Reality Check: FUD vs. Facts

Crypto investor and YouTuber Quinten Francois dismissed the panic, labeling it the “Next Bitcoin FUD.” While historical events surrounding Mt. Gox has influenced market sentiment, some argue that the impact may not be as severe as feared. Nevertheless, the market remains vigilant, especially given the recent sell-side pressure from the German government, which reduced its confiscated BTC reserves.

And here is the next #Bitcoin FUD

Mt. Gox moved 44,527 $BTC to an internal wallet, which may be preparing for repayment

DO NOT PANIC pic.twitter.com/ksZtOlRzYv

— Quinten | 048.eth (@QuintenFrancois) July 16, 2024

Similarly, John Glover, chief investment officer of crypto lending firm Ledn, suggested that many Mt. Gox users would likely cash out and enjoy the restitution. After all, having their assets stuck in the Mt. Gox bankruptcy turned out to be the best investment they ever made.

Bitcoin’s Performance and Key Levels

BTC short-term holder realized price (screenshot). Source: Look Into Bitcoin

Before this incident, Bitcoin had been performing exceptionally well. On June 21, BTC reached $65,000, a significant level based on its short-term holder cost basis. This cost basis, also known as realized price, traditionally acts as support during bull markets. Notably, it had last been violated in August 2023. As of July 15, the short-term holder cost basis stood at $64,835.

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