According to a previous report by Zombit, a significant amount of Bitcoin was transferred out of the Mt.Gox labeled on-chain address at the end of May. The official confirmation came later in a public letter, stating that these on-chain transactions were made in preparation for the repayment to creditors on October 31. As Mt.Gox is set to distribute 142,000 Bitcoins (BTC) to the creditors, valued at over $9 billion, the market’s ability to absorb such a large order will be severely tested if the creditors choose to sell their Bitcoin holdings.
However, Kaiko Research, a cryptocurrency market research firm, shared some good news in its latest report. The report indicates that the market depth of BTC and BCH has increased by approximately 30%, reaching levels similar to those before the FTX crash. In the event of a sell-off happening in the short term, the current market depth could help alleviate potential price volatility.
However, Kaiko emphasizes that there is a significant difference in the available liquidity between the Bitcoin and Bitcoin Cash markets. The liquidity of Bitcoin Cash is noticeably lower than that of Bitcoin, with a daily average depth of only $9 million, which is just 3.5% of the depth of Bitcoin. Currently, the buy-side depth of BCH is only $4.8 million, meaning that an equivalent sell order could cause a 1% decrease in BCH price. The market depth of BCH is far lower than the levels seen in September 2021 when prices were similar. In other words, if the creditors sell their assets, it could have a significant impact on the price of BCH.
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