The knowledge that Mt Gox bitcoin may be released on to the market as Silvergate collapses has led to a sharp fall in the bitcoin price.
Bitcoin has some fairly major headwinds to negotiate right now and it is probably for this reason that the price tumbled in the early hours of this morning GMT. Bitcoin lost 6.3%, taking it from $23,460 down as far as $22,000, where it has since recovered to around $22,350.
Silvergate destructing
Firstly, Silvergate bank looks to be heading for ultimate destruction. The news yesterday that Coinbase has suspended all associations with Silvergate, and that instead it has taken up with Signature bank, has pretty much sounded the death knell.
It also wouldn’t have helped that JP Morgan has decided to downgrade the bank. These events have led to the Silvergate price going into freefall. Since yesterday’s close, SI is down 57%.
Mt Gox bitcoin could enter the market
Another factor weighing down on Bitcoin is that the Mt Gox liquidator has decided to finish paying out creditors by September of this year. All creditors will have made huge profits by being unable to sell their bitcoin from the time when it was worth around $200, so it might be expected that a significant portion of this BTC could hit the market over the next few months.
Ethereum Shanghai upgrade
The Ethereum Shanghai upgrade is yet one more possible negative impact for Bitcoin. The upgrade gives stakers the possibility of unlocking their ETH. With 2 years worth of locked ETH suddenly becoming unlocked in April, another tidal wave could hit the crypto market.
Celsius and Voyager liquidators get busy
Finally, as if to cap it all, both the liquidators for Celsius, and for Voyager, are currently selling crypto into the market in a fairly aggressive manner in order to repay creditors, but also to pay the liquidation fees.
Bitcoin to revisit the bottom?
Such a lot of selling pressure is undoubtedly going to have its effect on bitcoin and the rest of the crypto market. Until these pressures start to subside, bitcoin could be shackled from rising, and could in fact revisit its lows.
However, there are many signs that the crypto market has indeed bottomed, and even if bitcoin does retest this bottom, it should be a healthy and organic event that could provide more impetus once the bull market gets going in earnest.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
