Oversupply, which has been a constant in the bitcoin (BTC) market in recent months, could continue to exert pressure for the remainder of 2024.
As noted in a report by analytics firm Kaiko, the possibility of forced sales and liquidation of bankrupt cryptocurrency holdings is likely to continue to limit the chances of a Bitcoin price rally.
The firm's analysis thus focuses on how the oversupply of BTC would affect the cryptocurrency market in the coming months.
This is a situation that could worsen if several bitcoin holders decide to launch their coins on the market before the end of the year, according to Kaiko. He referred particularly to the defunct exchange Mt. Gox and the United States government, although he did not rule out the actions of other large BTC holders, such as the United Kingdom, China and Ukraine, and even companies like Tesla.
Mt.Gox is reportedly close to delivering 46,170 BTC. Source: Kaiko.
In this sense, although the firm recognizes that so far this year the market has had sufficient liquidity - mainly due to the introduction of products such as bitcoin and ether ETFs - there are elements that point to new supply pressure.
"A better understanding of liquidity can alleviate fears related to the liquidation of large holdings," the report said.
They add that "it is not simply a matter of looking at volumes or market depth in isolation, but requires a combination of several indicators."
Among the indicators they mention the exchange order book and price slippage, which has to do with the difference between the expected price and the actual price at which trades are executed.
Be on the lookout for oversupply
Based on this, Kaiko says that we should be aware of the potential impact of the current oversupply and any large liquidation. Hence, they remember that there are still outstanding payments to Mt. Gox creditors, and that there are several governments now converted into bitcoin whales.
The study specifically talks about the assets of Mt. Gox, which still has about $2.72 billion (46,170 BTC) to return to creditors. Added to this are the 203,000 BTC that are in the hands of the United States government. Between them, they add up to about $15 billion.
Analysts take into account the fact that Mt. Gox creditors who have so far received their payments have mostly chosen not to sell their bitcoins.
More than 96,000 BTC have been delivered to the exchanges and custody platforms Bitstamp, Kraken and Bitgo so far.
Based on this, the firm Galaxy, a company issuing exchange-traded funds (ETF) for crypto assets, assures that the remaining refunds could probably be delayed until next year. Kaiko, for its part, thinks that it is possible that more payments will be made this year , although it affirms that the pressure from Mt. Gox would not be as strong in the market.
What will it look like? We know the state is working with Kraken on redistributions. Its liquidity profile suggests that any additional selling pressure from Mt. Gox refunds is unlikely to cause structural problems. However, it is important to use multiple metrics in combination with each other, as different events affect different indicators.
A different perspective arises if there are more BTC sales by the US government, or by other states, which could exert a very different pressure. This is likely considering that due to the upcoming presidential elections in November and the entry of a new government in January 2025, the United States decides to sell its BTC this year. Such a fact would turn things around .
In this way, Kaiko indicates that it is very likely that the excess supply that has characterized the market in recent months will continue in September, which would make it difficult for bitcoin to overcome the resistance of USD 63,000 in the short term.
