Fear of BTC Flooding Markets Fuels FUD – Weekly Roundup

Well that was a doozy.  This past week saw the broader digital assets market experience a sharp decline, which was sure to have rattled new investors.  While the overall market and majority of investors remain significantly up on the year, weeks like this can certainly test ones resolve.  Although there is no one event solely responsible for this market behavior, the following are a few which continue to weigh on the minds of many.

Fears of Flooding

With much of the appeal behind Bitcoin being its fixed supply and anti-inflationary nature, any event which may result in a sudden surplus of BTC has the potential to skew market prices.  The larger the surplus, the larger the potential effect.  Keeping this in mind, there have been multiple developing events of late which have caused undue FUD within the market.

Mt. Gox

Earlier in the week, we reported on potential restitution taking place for victims of both BitConnect, and the infamous Mt. Gox hack.  Although it is certainly a good thing that such events become a thing of the past, the potential restitution has apparently struck fear in to many.  The reason for this is a fear of freshly released BTC flooding the market, as victims may look to sell off any settlement to make up for past losses.

The present fear may be unfounded however, as actual distribution may not take place for some time, and when it does there is no reason to believe that all the recipients will be interested in offloading their BTC.  As it stands, fear over Mt. Gox is pure FUD.

The Song that Never Ends

In what feels like a song that never ends, Craig Wright continues to stand by his claim that he IS Satoshi Nakamoto.  Due to alleged history of lies and deceit, the vast majority of those involved with digital assets have come to view Wright as little more than a scam artist.  While this could all be resolved by simply proving/backing up his claims, Wright has unfortunately done little to do so thus far.

Regardless, many investors currently involved with digital assets are new to the sector, and have not been exposed to this ongoing saga for the past few years.  As a result, many continue to panic, becoming fearful that a poor outcome of an ongoing lawsuit involving Wright will result in the release/sale of the vaunted Satoshi BTC stockpile.

The lawsuit, which is predicated on the idea that Wright maintains access to, and controls said wallets, could potentially result in a judgement for him to hand over up to 1 million BTC.

Market Reaction and Metrics

While the aforementioned events may have placed a role in the retreat this week, this activity could possibly be due to nothing more than a consolidation period after run-ups to all-time highs.

An oft-referenced metric which looks at overall market sentiment continues to be the Bitcoin Fear and Greed Index.  This metric, which came in at 74 (greed) as recently as last week, has plummeted over the past few days to a value of 34 (fear).

In doing so, the index indicates that BTC has gone from an environment prime for selling to one now offering a relatively decent buying opportunity.