2024 has been an interesting year so far, and while many expected the approval of the Bitcoin Spot ETF to send the price to the sky, we have seen the opposite happen. At the time of writing, the price of a Bitcoin is approximately $39,500, meaning that it has dropped $6000-$7000 since the ETF was approved. Where is it going from here?
Since Mt. Gox went bankrupt (and was hacked), there have been rumors frequently about when the exchange will return Bitcoin to those who lost the back in 2014. So far, not much has happened, but things seem to get closer, and earlier today, rumors were spread that somewhere between 150,000 and 200,000 Bitcoin will be transferred back to their original owners sometime in March 2024. What kind of impact will this have on the Bitcoin price?
How will 200,000 BTC entering the market influence the Bitcoin price?
This is the question we all ask. There are people who expect the price to dump further, but not everyone believes that will happen. Why is that? What are the arguments pointing in either direction?
Why the price might not dump…
First of all, the people who owned Bitcoin back in 2014 were really early adopters. Some of them were in it for the money, but many of them because they supported the technology and they believed in the vision of Satoshi. Before Mt. Gox, the price of Bitcoin moved between $400 and $1200, so it was already worth quite a lot of money back then. Now, if you were an early adopter who believed in the vision of Bitcoin, you will for sure be happy to receive some Bitcoin in return worth much more than what they were worth back then.
It is, for sure, tempting to sell this. I have also lost funds to exchanges going bankrupt and disappearing, and the easiest way to handle funds lost in exchanges is to consider them gone. As a result, if you suddenly get something in return, it feels as Christmas, because you suddenly receive an unexpected and very valuable gift. I do believe many who will receive Bitcoin in return will consider it an unexpected gift that they didn’t really expect ever to receive. How will they treat this gift?
If they are early adopters, I believe it will be very tempting for many of them to do a 50/50 in which they sell half of the stock, and keep the second half. In that way, they will have funds for the future, after all, they want to be in the game as Bitcoin keeps taking over and strengthening its position in the financial world.
We are good at buying the rumor and selling the news. If people expect the price to dump, the price will dump before the actual event takes place. As a result, the price will fall before the Bitcoins are actually sent to the different owners. If the price has gone downwards before this event, it might not be as tempting to sell at once, considering that they all know that 1 Bitcoin is much more worth than $30,000, $35,000 or $40,000 (who knows what will be the price of a Bitcoin by then).
There is definitely a chance that people will sell Bitcoin based on the rumor and as Mt. Gox send the Bitcoins to the market, the price will suddenly pump rather than dump.
Why the price might dump…
200,000 Bitcoin is approximately 1% of the circulating supply. Of course, we know that lots of Bitcoin are lost, meaning that the circulating supply is much lower than 20,000,000. But, how will it influence the price as more than 1% of the liquid supply suddenly enters the market as a Christmas present arriving late? Many will likely cash out and praise God that they finally received their promised Bitcoin. And even if not everyone will sell, if we speak of people suddenly selling between 50,000 and 100,000 Bitcoin, it will still impact the price.
But, since lots of investors are smart, many people will likely stand ready for this moment, eager to buy cheap Bitcoin. Why is that? The Bitcoin halvening will happen in April 2024 and we all know how such events normally impact the price of Bitcoin in a very positive way. So, many people will stand waiting for a serious dump, hoping to get cheap Bitcoin before the price goes upwards once again.
The question is always… how far down will it go before it bumps back? It is impossible to catch the bottom, but if you are similar to many other Bitcoin enthusiasts, then you know that Bitcoin is a strong hedge against inflated FIAT currencies, and knowing that the number of new Bitcoins mined daily will halfed in April, this story will have a bright end no matter what.
What do you think? What do you expect?
Now I would love to hear what you think. Do you believe the Bitcoin price will dump as Mt. Gox returns Bitcoins to its rightful owners? Or will it be a dump the rumor and buy the event thing? I would love to hear your thoughts!