- Miles Deutscher suggests that the Mt. Gox BTC unlock and Shanghai unlock were the root of the recent slump.
- The crypto commentator claims that the downfall is due to de-risking tactics employed by investors.
- Bitcoin hit a three-week high, but many traders are transferring their digital assets to cold wallets.
The crypto sphere has been struck hard recently, with Bitcoin and Ethereum both dropping by 5% and 6% respectively. Crypto analyst Miles Deutscher took to Twitter to try and uncover the potential causes of the nosedive.
According to Deutscher, the market declines of Bitcoin and Ethereum have left investors and holders on edge. The defunct exchange Mt. Gox is supposed to start disbursing its Bitcoin holdings on March 10th, after two months of delay, which could lead to a deluge of BTC flooding the crypto market.
The same goes for Ethereum, with the Shanghai hard fork unlocking 17.5 million staked ETH, totaling nearly $29 billion. Investors are worried that holders of these long staking contracts will decide to liquidate their assets, plunging the market into further chaos.
The crypto commentator posits that the sell-off is a result of de-risking strategies used by traders. Despite the stock market hitting a three-week high, many are transferring their crypto assets from exchanges to offline wallets. This is especially true for those who have long positions in Bitcoin and Ethereum.
Recent reports by major investment firms suggest that the consequences of unlocking cryptocurrency may not be as dramatic as expected. Analysts at UBS stated that they have concerns that the Mt. Gox BTC payouts are exaggerated as large creditors have chosen crypto distributions instead of fiat.
Opinions on the ETH unlocking are still uncertain. While Bernstein have warned investors to be wary of the Shanghai Upgrade, asset management companies believe that the unlocking won’t have a negative effect on ETH.
Data from Coinglass reveals that traders are trying to take advantage of Bitcoin’s discounted price. As of the time of this article, the flagship crypto had $73 million in active long positions and only $4 million in shorts. Ethereum also had similar metrics with $40 million in longs and $1.58 million in shorts.
This article was first published on Coin Edition.
