Peter Chung, an analyst of Presto Research, has examined the intensity of the selloff that ostensibly will be caused by the repayment of Mt Gox creditors, set to flood the market with close to 142,000 BTC between July and October. According to Chung, BCH will hurt the most with this selloff, given its weaker investor base.

Mt Gox Repayment Event Set to Affect Bitcoin Cash Prices Heavily

The Mt Gox repayment event and its corresponding liquidity release will hit bitcoin cash (BCH) holders significantly, according to Peter Chung, an analyst from Presto Research, a quantitative trading firm building automated trading systems. The event, set to happen between July and October, will deliver almost 142,000 BTC and BCH to Mt Gox creditors, opening a trade opportunity to go long BTC and short BCH, Chung claims.

Chung assesses that the weaker investor base surrounding BCH will cause a higher selloff, as he expects that 100% of the BCH delivered to creditors will be sold in the near term. In contrast, only a limited amount of the BTC delivered to creditors will be sold, given the narrative surrounding BTC.

In this regard, Chung stated:

For BTC, only a fraction will be sold, given that the creditors are mostly ‘diamond-handed’ wealthy.

Also, the fact that the BCH fork happened three years before the Mt Gox event, means that they might be “oblivious to Bitcoin Cash’s cause and more likely to treat their BCH payment like any degen traders would do with an airdrop,” cashing out immediately. According to estimations, the selling pressure on BCH will be four times higher than the selling pressure for BTC, given the lower market trading volumes for the former.

Chung believes this might be an opportunity for traders to profit from this unique liquidity event, taking advantage of the upcoming market fluctuations derived from this situation in the coming months.

What do you think about the Mt Gox repayment plan’s effect on bitcoin, bitcoin cash, and the wider cryptocurrency market? Tell us in the comments section below.

Source: news.bitcoin.com.