Excess Supply Threatens to Push Bitcoin Price Further Down: Experts  

Analysts assessing Bitcoin sales impact warn of pressure to drag BTC price further down. 

Recent reports by analysts warn that the crypto market should brace for likely turbulence in subsequent months. The analysts attribute the value erosion to major BTC holders, including US and defunct Mt. Gox, liquidating portions of their reserves.  

The crypto market should brace for turbulence in the subsequent months following the BTC dump. Analysts express concerns about the downward pressure on the leading crypto asset and liquidity.

Bitcoin Battles Supply Overhang

According to a recent report by crypto data provider Kaiko, the market is presently struggling with a supply overhang. The situation is persistently a dominant theme in the entire summer. 

Previous instances of liquidation by the German government compelled the sale. A similar pressure surfaced between May and August following news that bankrupt crypto estates would liquidate a portion of their reserves.

Dragonfly general partner Rob Hadick illustrated the summer witnessed significant Bitcoin prices from the Mt. Gox distributions. Also, the hawkish move by the Bank of Japan (BoJ) to end the Japanese yen carry trade triggered a sale that plunged BTC into a downtrend.  

Hadick illustrates the market portrays concerns about the overhang of huge holdings by the governments. Also, the additional dumbs from Mt.Gox distributions fuel the overhang further. 

Handick warns the leading source of anxiety is the ongoing repayments to the Mt. Gox creditors. The bankrupt exchange estate has over 46,000 BTC in its reserves worth slightly over $2 billion. Such is scheduled for the eventual redistribution. 

Fideum co-founder Darren Franceschini elaborates on the distribution impact with the likely sale of the $2.7 billion worth of Bitcoin. The executive considers that the repayment will add to $8.2 billion of selling pressure were the creditors to dispose of entire holdings. 

Potential Selling Pressure From US Government Holdings

Franceschini believes that other holders harbor the potential to increase the selling pressure in the future. In particular, the US government possesses Bitcoin with a value surpassing $2 billion.

Franceschini acknowledges that while the US is yet to issue an official announcement regarding the sale. Nonetheless, the possibility of liquidating such reserves would ultimately exert huge pressure on the crypto market. He notes that other nations including China, the UK, and Ukraine have huge BTC reserves. 

The Kaiko report emphasizes the essence of factoring beyond mere trading volumes when evaluating the market liquidity. One should consider other elements particularly market depth comprising the capability to absorb large orders while averting price impact. 

Kaiko spotlights the essence of the volume-to-liquidity ratio alongside the price slippage as a crucial metric indicative of market health and efficiency. 

Bitcoin suffered a significant price decline during the onset of August. Bitcoin saw a breach to trading $50,000 for the first the initial time since February. Cube.Exchange’s chief executive Bartosz Lipiński illustrates that the crypto market witnesses rapid shifts. 

Lipiński illustrates the difficulty of predicting the participants likely to become active sellers. Nonetheless, one can make an educated guess facilitated by a handful of certain factors.  

Lipiński highlights that the repayments from Mt. Gox trustees coupled with outflows from the Bitcoin exchange-traded funds (ETFs) are potential sources of selling pressure. The sustenance of this trend would justify Bitcoin’s struggles to retain support at and above $60K within the short to medium term.  

Despite the existence of such challenges, several experts believe in the market recovery. Hadick considers the looming US election itself to emerge as a catalyst in the promise of a friendlier regulatory environment. 

Hadick considers that clarity in the regulatory framework would trigger more interest from the institutional buyers. Notably, the large-cap wealth management distribution channels can begin marketing ETFs. Such is critical with long-term holders of BTC rising quickly since the onset of July, indicating accumulation. 

Lipiński cautions regarding a potential wildcard in the November election. Also, the US has recently moved its Bitcoin balances on exchanges even after the Republican candidate Donald Trump vowed not to dispose of the seized crypto. 

The executive considers that should the authorities unveil the mass liquidations of the reserves, the crypto enthusiast would miss out on the Santa Rally. Such an occurrence would hinder the upside price movement from ever materializing in Q4 for the initial time.  

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