Bitcoin investors can now rest easy after news that Nobuaki Kobayashi the Mt Gox trustee will not sell more bitcoins – at least until September.
The Japanese bitcoin whale thought to have been largely responsible for the recent crash in bitcoin prices after reports emerged he had disposed of $400 million worth of bitcoin since December 2017 to pay off creditors.
The lawyer is now a much derided figure in the bitcoin community.
In the short period, Kobayashi sold about 35,000 bitcoins. Details of the sale were published last week. It has now emerged the trustee will need a court approval to liquidate the remaining bitcoins. The hearing of the case will not happen until September.
The downward pressure which has persisted for much of this year has now been ascribed partly to his actions. Combined with harsh regulatory scrutiny, the massive dumping seems to have turned the tide for the asset that had otherwise been shooting for the stars. In December, its value had come close to $20,000.
Markets were bullish after the news emerged. Bitcoin’s value came within a hairbreadth of $10,000 before slightly retreating on Monday. Its value tanked on Friday amid harsh regulatory scrutiny from the US and the Asia Pacific. At one point, the cryptocurrency was trading below $8500. Such lows were last seen in early February’s spectacular crash.
Mt Gox filed for bankruptcy in 2014 after the exchange was hacked and 850,000 bitcoin were stolen in the biggest cryptocurrency heist yet. Some 200,000 bitcoins were later recovered. In its heyday, Mt Gox accounted for 70% of all bitcoin transactions.
Nabuaki Kobayashi still has in excess of 166,000 bitcoins under his custody valued at more than $1.6 billion going by current prices.
This makes him one of the most influential holder in the cryptocurrency space. Monday saw bitcoin having a strong start with prices rising as much as 15% before falling to about $9,200 towards the close of the day.
There was a slight uptick in prices after news that Mt Gox trustee will not sell until September
News that the sale will not happen anytime soon will likely see bitcoin’s value steadily rising in the short term.
Regulatory Scrutiny
Japanese authorities imposed penalties last week on seven exchanges for various breaches. At least two were suspended for a month for inadequate controls and security measures to safeguard customer deposits. An official in one of the suspended exchanges was found to have taken deposits for personal use.
Two exchanges were ordered suspended for a month.
In the US, the Securities & Exchange Commission turned the heat on exchanges that were falsely presenting themselves as being regulated by the commission.
Bitcoin futures contracts launched last December are also expiring and could be contributing to the overall downward trend.
Offloading large volumes can trigger a crash as the seller is forced to accept lower and lower bids. Traders will read the trend as a signal of an impending crash and start selling off. This snowball effect can result in a massive crash such as the one seen in February this year.