Bitcoin's Fall in Focus
According to a report from research firm Kaiko, creditors have started receiving tokens from the defunct Mt. Gox digital asset exchange, and government wallets for the United States, China, the United Kingdom, and Ukraine are possible destinations.
A potential overhang of $33 billion in Bitcoin supply includes that.
Kaiko calculated that the US government has 203,220 BTC, China has 190,000 BTC, the UK has 61,200 BTC, and Ukraine has 46,350 BTC.
In criminal cases, governments often take tokens, and it is believed that Ukraine received donations to bolster its defence against Russia's invasion.
According to Kaiko, there are about 46,170 tokens remaining for distribution at Mt. Gox.
Bitcoin dropped 2.9% on Friday to about $57,800, down about $16,000 from its March high.
Concerns about large-scale sell orders coincide with a lack of market liquidity, which might worsen price fluctuations caused by large trades. This background has contributed to the 10% monthly decline in digital assets, while global stock and bond indexes have gained around 2%.
Net inflows into US spot-Bitcoin ETFs and rising expectations of a monetary policy loosening by the Fed in the coming weeks have not helped Bitcoin's performance in August.
The Bitcoin ETF market in the United States has likewise seen a more difficult trading environment.
The Hui-Heubel ratio, which measures liquidity by counting the number of trades needed to change prices, is a component of that data. This indicator has declined for all spot-Bitcoin ETFs since March, which underlines the worrying sign for their liquidity during the last six months.
According to Bloomberg data, the combined daily trading volume for US Bitcoin ETFs has fallen to about $2 billion – a far cry compared to March, when this figure reached over $10 billion.
Short Squeeze?
K33 Research's cryptocurrency experts have noticed a trend in the Bitcoin futures market, which they interpret as an indication of an impending "short squeeze" that might trigger strong price increases for the leading digital asset.
This indicator measures the level of optimism or pessimism among Bitcoin speculators and is based on the financing rate for Bitcoin perpetual futures.
According to K33, the seven-day average annualised financing rate hit a new low on August 20, the lowest since March 2023, when investors were scared by US bank collapses. This suggests that downside bets were prevalent.
Squeezing occurs when unexpected price spikes cause fast-money traders to liquidate their negative bets, which in turn contributes to the rebound.
According to K33, the perpetual market's notional open interest, which refers to outstanding contracts, increased by over 29,000 Bitcoin in the last week.
The seven-day average annualised funding rate was -2.5%. It is unusual to have a negative funding rate and quickly rising open interest. They are popular among crypto industry traders because there is no predetermined expiration date for perpetual futures.
Another exchange that may signify institutional investors getting back into Bitcoin is the more conventional one run by CME Group in Chicago. Activity there has also been growing.
Events
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