Bitcoin faced challenges amidst recent Mt. Gox repayments and evolving market conditions, yet the bearish behavior should not be viewed negatively. Last week, Bitcoin's price concluded at around $55,850, reflecting an 11% decrease from the previous week's close at $62,775. The week experienced substantial selling pressure, causing BTC to drop to $53,500 before recovering to $58,250 and settling at $55,850.
BTC Spot ETFs recorded net inflows of $238 million during the downturn, with a cumulative trading volume of approximately $315 billion since inception, indicating a decline in trading activity - a common occurrence in Q3. This trend is understood as seasonal, particularly among traditional finance investors, according to Matteo Greco, a Research Analyst at Fineqia International.
Interestingly, the recent decline did not correlate with BTC Spot ETF flows, signaling a departure from historical patterns where ETF flows influenced price movements significantly. For the first time, there is a noticeable detachment between price actions and capital flows, indicating that recent price behavior is primarily driven by trading activities within the crypto-native space.
Mt. Gox's long-awaited repayments have contributed to the high on-chain selling pressure observed. Established in 2010, Mt. Gox rapidly became the largest Bitcoin exchange globally but faced a swift downfall, halting operations, declaring bankruptcy, and revealing the loss of 850,000 BTC due to thefts from its hot wallets.
The recent movement of 47,228 BTC from a Mt. Gox-associated cold wallet to mark the beginning of repayments has impacted the market. The ongoing decrease in miners' selling pressure, following a recent halving that cut mining rewards by 50%, has influenced prices, albeit diminishing.
The recent downturn has led to a decrease in unrealized profits, influenced by long-term holders selling their coins. The MVRV ratio, now around 1.5, indicates an average unrealized profit of 50% among market participants, down from over 200% in March. Greco noted that this trend suggests recent price fluctuations are driven by long-term holders selling for profits and new buyers purchasing at higher prices.
