We now know why Bitcoin Prices have Crashed

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The trustee of the ill-fated Mt. Gox bitcoin exchange crashed the market several times in the process of selling 65,000 of the estate’s 200,000 remaining bitcoin, TrustNodes reports.

The suggestion that a Mt. Gox sale is behind a series of recent price crashes might be both good news and bad news for bitcoin enthusiasts.

The good news is that an anomalous event was behind the market crash, and it might not happen again. The bad news is that it highlights bitcoin’s severe liquidity problems. Even staggering the sale of 65,000 coins over a month seemed to have a devastating effect on prices.

The coins were sold on exchanges in batches of thousands on 22 December (6,000BTC), 17 January (8,000BTC), 31 January (6,000BTC) and then a total of 18,000 on 5 February (moved in three batches of 6,000).

In a court document, the trustee says they sold the bitcoin for the maximum amount they reasonably could and thought it was a good move to secure some credit while they could, although creditors are of two minds about it.
“I considered it necessary and reasonable to sell a certain amount of BTC and BCH at this point and secure a certain amount of money for distribution resources,” the trustee wrote.

Reports say that the Kraken exchange was meant to be the bitcoin’s destination, but Kraken’s relatively thin BTC:JPY volume makes this seem unlikely. Typically a sale of this size might be done off the books, or through an auction. This is how hoards of seized criminal bitcoin are typically sold.

It’s possible that the price drops were caused by factors other than the bitcoin sales, but this would be quite a coincidence. Also, other coins didn’t experience similar drops until they followed the bitcoin down as cryptocurrency markets often do.

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