- Miles Deutscher believes that the Mt. Gox BTC unlock and Shanghai ETH unlock triggered the recent sell-off.
- The crypto analyst has claimed that de-risking strategies by traders have prompted mass liquidation.
- Long positions on Bitcoin reached a three-week high earlier today.
The past 24 hours have seen a bloodbath in the mainstream crypto market with heavyweights like Bitcoin and Ethereum tanking 5% and 6% respectively. Crypto analyst Miles Deutscher took to Twitter earlier today to take a closer look at the sell-off and explain the possible reasons for the price decline.
According to Deutscher, the potential market dumps of Bitcoin and Ethereum have spooked holders and traders alike. Defunct crypto exchange Mt. Gox is set to kick off the distribution of Bitcoin next week on March 10, after delaying the process for two months. BTC holders and traders are anticipating the payouts to flood the crypto market with Bitcoins.
A similar case has emerged with Ethereum, where the Shanghai hard fork will unlock a whopping 17.5 million staked Ether worth nearly $29 billion. Crypto investors are concerned about long-time stakers choosing to unlock their Ether staking contracts and flooding the market with the unlocked Ether.
However, recent reports from investment giants have found that the aftermath of the above-mentioned crypto unlocks may not be as drastic as anticipated. Strategists at the Investment Banking Company, UBS, stated recently that the concerns surrounding Mt. Gox’s BTC payouts are overdone since the biggest creditors have opted for crypto payouts rather than fiat.
Opinions on the ETH unlock remain conflicted. While firms like Bernstein have recommended caution in the run-up to the Shanghai upgrade, other asset management firms have argued that the unlock is unlikely to create selling pressure and impact ETH negatively.
Data from Coinglass shows that traders have scrambled to capitalize on Bitcoin’s discounted price. The flagship crypto had more than $73 million in active long positions, as opposed to $4 in shorts at the time of writing. ETH shared similar metrics, with $40 million worth of longs and $1.58 million in shorts.