In a recent analysis, Kiarash Hossainpour, founder of Colorways Ventures and The Consensus, has raised concerns about a potential shockwave in the Bitcoin market. The analysis points to several significant Bitcoin holdings that could exert substantial selling pressure, potentially leading to a seismic shift in the cryptocurrency landscape in the first half of 2024.
Identifying Potential Bitcoin Sellers and Selling Pressure:
Hossainpour first draws attention to the Grayscale Bitcoin Trust (GBTC), which has witnessed a reduction in holdings from 621,000 BTC to just under 580,000 BTC since the launch of their spot ETF. The high annual fee of 1.5% and Grayscale’s historical context contribute to a significant sell-off, adding to the current downward trend. Hossainpour estimates a remaining selling pressure of 281,045 BTC, equivalent to approximately $12 billion.
Another substantial factor in this potential sell-off is the long-awaited distribution from Mt. Gox, expected to release 138,000 BTC (valued at $5.8 billion) to creditors in 2024, following a decade in insolvency proceedings. Insolvency proceedings of Celsius and FTX may further contribute to the potential sell-off, with around 38,000 BTC ($1.6 billion) from Celsius and approximately 20,500 BTC ($850 million) from FTX slated for liquidation and distribution in the first half of 2024.
Bitcoin miners, particularly in the US, are estimated to hold around 32,000 BTC ($1.35 billion), accumulated ahead of the next Bitcoin Halving event in mid-April. A portion of these holdings is expected to be sold in 2024, although the actual global miner holdings might surpass these estimates.
The US government’s strategy with seized Bitcoin also plays a crucial role in this forecast. Authorities have seized 207,189 BTC from cases tied to the Silk Road, Jimmy Zhong, and the Bitfinex hackers. While only a fraction has been sold, periodic batches of these BTC are typically released into the market by the US government. The total Bitcoin holdings of these entities amount to over 716,000 BTC.
Managing the Impact:
Hossainpour emphasizes that although these potential sell-offs represent a significant amount of BTC entering the market, the impact might be mitigated by the differing timelines and strategies of each seller. He notes, “Overall, a wide range of selling pressure hitting Bitcoin. It’s important to note that each of these sellers has their own timeline, it doesn’t all happen at once, which significantly reduces the impact.”
As the cryptocurrency market braces for potential seismic shifts, investors and enthusiasts will closely monitor how Bitcoin absorbs this considerable selling pressure from diverse entities with varied timelines and strategies. The evolving landscape of Bitcoin, influenced by Grayscale, Mt. Gox, Celsius, FTX, miners, and the US government, underscores the importance of strategic foresight in navigating the dynamic crypto market in 2024.
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