For almost as long as Bitcoin has been trading, its existence has been a thorn in the side of crypto investors everywhere. And starting today, new crypto investors can soon find out why veterans flinch when they hear the name: Gox.
Find out why the infamous, original crypto exchange could continue to be the bane of every bitcoin bull run.
What is the mountain Gox and what does it mean for bitcoin?
Mt. Gox is short for “Magic: The Gathering Online eXchange” according to Wikipedia. But when its creator Jed McCaleb got interested in Bitcoin, he turned it into a cryptocurrency exchange.
Without them, Bitcoin adoption might not have developed as it did in the past. Why are crypto investors suddenly so shocked by the platform, which has long since defunct?
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News from Bloomberg’s Matt Leising suggests that Coinlab has entered into a deal with the Mt. Gox creditors that allows original investors to claim up to 90% of the BTC originally lost. The transaction is subject to creditors’ approval, but it could result in some of the original 140,000 BTC being launched.
Much of what drove the recent Bitcoin rally was a shortage of coins on the exchanges, but a sudden influx of sellers with tens of thousands profit per coin could turn the tide against the general bull trend again.
The impact of the mountain. Gox over the years | Source: BTCUSD on TradingView.com
How the early swap destroyed every major crypto rally
While the existence of the early exchange was vital to Bitcoin’s initial growth, it has been nothing but a thorn in the side since then. Mt. Gox was responsible for almost every major climax in cryptocurrency history that dates back to 2013.
The first of these occurred when the crypto market was so hot that the exchange stopped trading to force a “cool down” period on the market. It cooled off with a weeklong high to low candle that gave a full 80% retrace.
The next big peak occurred when the problems at Mt. Gox came to a head. The platform struggled until 2014, but it was February 2014 when withdrawals stopped.
The full details of the hack created the first major bear market in the leading cryptocurrency by market cap. After taking three years to recover, Bitcoin finally slumped all expectations and became a household name in 2017, peaking at $ 20,000.
It wasn’t until later in 2018, following subsequent sell-offs, that blockchain data showed it was the trustee responsible for holding the mountain. Gox BTC sells on the market to cover costs and recoup funds.
Related reading | The striking similarities between the Bitcoin Peak 2017 and now
The trustee began moving Bitcoin on December 18, the very high point of the last bull market. The rest is history.
Bitcoin is back, doubling its 2017 high. Will these early crypto investors keep going for much higher prices? The highest price the cryptocurrency traded at in 2013 and 2014 was under $ 1,200. That means that even at today’s price of $ 35,000 and a 90% allocation, they’ll still make over $ 30,000 per coin in profit.
Even if each investor only sold half of around 100,000 BTC, 50,000 BTC suddenly flooded the market. The trustee sold far fewer than it did in 2017 and ended up cutting the cryptocurrency back down to $ 3,200. What kind of damage is this going to do to the market this time around?
Featured image from Pixabay, charts from TradingView.com
