Analysts predict Bitcoin drop to $50K after Mt. Gox transferred 47,229 BTC

On July 5 at 12:30 AM UTC, the defunct cryptocurrency exchange Mt. Gox transferred 47,228.733377282 BTC, worth approximately $2.7 billion, to a new hot wallet, triggering fears of massive market sell-offs.

Notably, Mt. Gox’s transfer comes on the heels of other massive Bitcoin transfers by the German and US governments, pilling additional bearish pressure on Bitcoin, which had already lost the $60k support.

Explaining the Mt. Gox Bitcoin transfer

Mt. Gox, once a major player in the cryptocurrency world, collapsed in 2014 following a massive security breach that resulted in the loss of around 850,000 BTC. Since then, the exchange has been working towards repaying its creditors.

The recent transfer of about 47,229 BTC is part of the repayment plan, which at conclusion is expected to total approximately $9 billion in Bitcoin (BTC), Bitcoin Cash (BCH), and fiat currency.

According to data from blockchain analysis platform Arkham Intelligence, today’s transfer was preceded by several smaller test transactions to ensure the process would run smoothly. However, despite these precautions, the market has reacted sharply to the recent transfer.

Bitcoin’s price dropped below $58,000 immediately after the transfer and further plummeted to $53,717, triggering widespread concern among investors.

Bitcoin price prediction post Mt. Gox’s movements

Analysts are divided on the potential long-term impact of these events. While some had predicted a July rebound citing historical patterns, others like BTC Markets’ Crypto Analyst Rachael Lucas, predict significant selling pressure as creditors receive their repayments and potentially liquidate their holdings.

While the total repayment amount is estimated to be $9 billion, not all of it will be sold at once. Estimates suggest that the actual amount likely to be sold might be closer to $4.5 billion.

Historical patterns provide some insight into how the market might react. In May 2021, the crypto markets experienced a sharp decline following an SNL event hosted by Tesla CEO Elon Musk. This event triggered a massive sell-off, particularly in DOGE, which then spread to other cryptocurrencies.

A similar pattern occurred in August 2023 when Bitcoin dropped from around $30,000 to $25,000, only to recover and enter an ascending trend by the beginning of Q3.

The recent market movements bear similarities to past corrections, suggesting that after a period of volatility and potential sell-offs, Bitcoin might stabilize and begin to ascend once more.

Based on these patterns, some analysts like TraderSZ believe that while Bitcoin may drop to around $50,000 in the short term, it has the potential to recover.

However, there are some like TechDev that believe that Bitcoin could see a drop to around $25k before the current bear market comes to an end.

At press time, the price of Bitcoin had recovered from its daily low and was trading at $54,264.81, but was still 7% down over the past 24 hours.