Mt. Gox Effect? Bitcoin Dominance Drops Most in 5 Months

In an intriguing display of investor concerns, the primary cryptocurrency suffered greater losses than smaller tokens, resulting in a noticeable decrease in its market supremacy, as the looming distribution of compensation for the 2014 Mt. Gox hack victims approached.

Concerns over potential sell-offs in the Bitcoin market have increased the interest in buying short-term put options for this digital currency on the Deribit exchange. These put options serve as a safety net, shielding investors from losses caused by price decreases in Bitcoin.

As a researcher studying financial markets, I’ve noticed an intriguing development in the call-put skews: the seven-day and one-month skews have shifted from positive to negative. This change indicates that traders are now more eager to buy put options than call options. In simpler terms, they’re willing to pay a premium for the protection offered by puts against potential losses over both short-term (one week) and medium-term (one month) horizons.

Some people believe that the demand for Bitcoin caused by Mt. Gox refunds might not be as strong as anticipated.

According to Tagus Capital’s market update, the precise amount of Mt. Gox funds to be dispersed in July has yet to be determined. However, this distribution is part of a broader compensation scheme that encompasses 142,000 Bitcoins, 143,000 Bitcoin Cash, and an equivalent of 69 billion Japanese yen ($432 million) in fiat currency.

As a crypto investor, I can understand the dilemma facing Mt. Gox creditors. They might choose to hold onto their Bitcoin instead of selling it, seeing themselves as long-term investors. After all, they had previously declined offers for USD payouts. However, if they decide to sell, they may incur capital gains tax liabilities. Therefore, the decision to sell or hold could have significant financial implications for them. According to Tagus Capital’s market note, this is their perspective on the matter.