Are "Gox Coins" Disrupting the Market?
About Mt. Gox's Repayments
The ten year old Mt. Gox saga is finally approaching its end, as on May 27th the company's bankruptcy estate transferred bitcoin from its cold wallet for the first time in over five years.
The Tokyo-based bankruptcy trustee Nobuaki Kobayashi recently transferred the exchange's 141,868 bitcoin balance ($9.7B) to 1JbezDVd9VsK9o1Ga9UqLydeuEvhKLAPs6, which has now been emptied and split equally to 3 other addresses managed by Kobayashi himself.
The ten year saga of Mt. Gox dates back to 2014, when the exchange was hacked, losing losing almost 950,000 bitcoin units. Over the subsequent 10 years, approximately 15% of the lost customer assets were recovered, which equates to 141,768 bitcoins (worth $9.7B at the current spot price). Nobuaki Kobayashi expects to deliver the recovered bitcoins to roughly 20,000 creditors.
In late 2021 Mt. Gox officially published a formal rehabilitation plan in order to return lost funds back to investors. The creditors have an option to receive US dollars (USD), bitcoins (BTC), or bitcoin cash (BCH).
Institutions like Fortress Investment Group, have been buying Mt. Gox claims of those individuals who wanted to cash out early. The claims have formed a liquid market for speculators along the years, as each creditor is expected to receive around 20 percent of the original balance.
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Mt. Gox bankruptcy estate balance: ₿141,686
Estimated USD value: $9,701,479,007
Circulating bitcoin supply held by Mt. Gox trustee: 0.72%
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The Mt. Gox coins currently account for 0.72 percent of the total bitcoin supply, which is a small number. 0.72% is hardly enough to move the markets by itself, so the Mt. Gox repayments could mainly be considered as a non-event. It’s pretty obvious that all the creditors are not selling as many of them are “old bitcoiners” and thus “holders of last resort." In the after market, many claims have ended up into institutions like Fortress that are unlikely to sell their assets in the short term.
Bitcoin Consolidating at $71K
From a purely technical perspective, the leading cryptocurrency bitcoin has gained new momentum this week, rising 4,8 percent within the past seven days. After falling to $57,000 in May's deep technical correction, bitcoin now seems to be consolidating, opening a window of opportunity towards higher price levels.
From a Dow Theory vantage point, bitcoin is now in a distribution cycle, following a long accumulation phase dating back to late 2022, which also acted as a technical inflection point.
It's easy to see bitcoin reaching six figures in 2024 - 2025, representing a huge psychological price target. While the existence of many speculative altcoins is temporary, bitcoin is here to stay, continuing its multi-decade supercycle.
Sources: Timo Oinonen, CryptoQuant
The next near term cycle phase for bitcoin is called post-halving re-accumulation, representing a new price discovery phase in this environment. If the macro factors permit, we could even reach six figures in late 2024's possible double top structure.
Fed and its interest rate cut schedule plays a big role in crypto price discovery, as the "cheap dollar" firstly benefits risk-on assets. During previous cycles, the low (or negative) interest rates have greatly elevated bitcoin and its higher beta low-cap token fellows.
Source: Material Indicators
Cumulative volume delta (CVD) shows the retail segment remaining relatively inactive, while some whale level buyers are in accumulation mode. Large $100K - $1M category orders have been in an elevated role during the past days.
Staked USDe Reaches $1.1B
The new "synthetic dollar protocol" Ethena has been one of the most hyped launches this year, reaching a market capitalization of 1.74 billion US dollars within its first week of operation.
Source: CryptoQuant
At the same time, the volume of Ethena's ENA token has reached top positions across major exchanges, and its new stablecoin USDe has surpassed $3.1 billion in circulating supply in a few months. Offering a 27.5 percent annual percentage yield (APY), Ethena has become a preferred staking platform for many.
Source: CryptoQuant
What is Ethena? Some analysts have placed it into the decentralized finance (DeFi) category, however CryptoQuant's Ki Young Ju called it "CeFi with custody/execution-related risks". Currently, over 75% of the stablecoin USDe's supply is concentrated in the five biggest wallets, mirroring its centralized structure.
Ethena's stablecoin USDe differs significantly from more traditional ones like Tether (USDT) and USD Coin (USDC). The peg stability of USDe is ensured through the use of delta hedging derivatives positions against protocol-held collateral. Additionally, this represents a different set of risks compared to older stablecoins. USDe is a synthetic dollar, collateralized with crypto assets and corresponding short futures positions.
For some people, USDe might give a déjà vu feeling, remembering the notorious case of Terra and its stablecoin UST. However, unlike the former stablecoin of Do Kwon, USDe generates yield through an allegedly safer mechanism.
Source: CryptoQuant
Despite the growth of staked USDe, the amount of active addresses is in a slight decline. It's also good to remember that Ethena's current float is only 0.09, meaning that 91 percent of the supply is at the hands of the founders or locked in by VC investors.
However, Ethena's major VC unlocks are scheduled for January 2025, giving a "safe corridor" for this year. From a price discovery perspective, ENA reached its market bottom in mid-May, forming a technical inflection point. A reasonable target price is now around two US dollars per each ENA unit.
Spot ETF Inflows Rising Again
While bitcoin's recent halving event represented a supply shock, effectively reducing the supply by -50%, the recently launched spot ETFs can be considered as a demand shock. This week's data shows 12,508 bitcoin units purchased by the ETFs on Tuesday (4.6) alone, while miners only minted 450 new units.
Source: Quiten Francois
The US-based bitcoin ETFs reached a net inflow of $887 million this Tuesday, recording their second-best day yet. Ethereum's upcoming spot ETFs have also gained notable traction, with BlackRock reporting a seed investor acquiring shares worth $10 million on May 21st.
Source: Steno Research
