Bitcoin (BTC) is usually less volatile than altcoins, but this Monday saw a notable exception. Bitcoin experienced a more significant drop compared to other cryptocurrencies, leading to a substantial decline in its market dominance. This decline highlights concerns about the potential impact of the upcoming payments to victims of the 2014 hacker attack against Mt. Gox.
BTC’s market dominance, or its share of the total cryptocurrency market value, dropped to 54.59% as of June 25, marking the largest single-day decline since January 12. This suggests that investors have been withdrawing funds from Bitcoin at a faster pace than from other cryptocurrencies.
The sell-off, according to many analysts, was triggered by the news that the non-existent cryptocurrency exchange Mt. Gox plans to distribute 140,000 BTC to victims of the hacker attacks in July. This announcement fueled concerns that recipients may sell their assets once received, potentially leading to price declines.
These concerns were further exacerbated by increased selling pressure from miners and outgoing flows from Bitcoin exchange-traded funds (ETFs) since June 7.
Heightened fears of sell-offs also stimulated demand for short-term put options for BTC on the Deribit exchange, tracked by Amberdata. Put options provide protection against a decline in the asset’s price. The seven-day and one-month put-call skews, reflecting the premiums that traders are willing to pay for asymmetric payouts in either direction within a week and a month, turned negative, indicating increased demand for put options.
Despite these concerns, some market observers believe that the actual selling pressure from Mt. Gox compensations may be more moderate. Tagus Capital noted in a market comment that while the exact amount of Bitcoin to be distributed following potential token sales from Mt. Gox is unspecified, it is part of a broader recovery plan that includes 142,000 BTC, 143,000 Bitcoin Cash (BCH), and fiat currency totaling 69 billion Japanese yen ($432 million).
Tagus Capital also assumes that Mt. Gox creditors may prefer to hold onto their BTC rather than sell immediately. These creditors are considered long-term investors who have previously rejected offers for payouts in US dollars and may prefer to hold onto their assets to avoid capital gains taxes upon sale.