Data shows that the “paper” Bitcoin has seen a significant rise in price recently while the spot cryptocurrency has fallen.
Bitcoin Paper Value Soars While Spot Bitcoin Remains Steady
In new string On the X show, analyst Willy Woo talks about the state of the Bitcoin market. Bitcoin has been on a downward trend recently, with the German government selloff and Mt. Gox dividend being among the main sources of fear and doubt among investors.
Wu noted that Germany has sold about 10,000 bitcoins, while 39,800 bitcoins are still in government possession.
The data for the holdings confiscated by the German government | Source: @woonomic on X
Mt. Gox hasn’t distributed much of its BTC yet, with only 2,700 BTC returned to its owners. The bankrupt exchange still has 139,000 BTC left to distribute, but the downside impact of these holdings depends on whether the coin holders who received the coins are willing to sell.
The trend in the Mt. Gox balance over the years | Source: @woonomic on X
These two entities don’t seem to have added much actual selling pressure to the market yet. So what’s the real reason behind Bitcoin’s collapse? According to the analyst, it seems to be paper Bitcoin.
Paper BTC refers to derivative products linked to the cryptocurrency that do not require ownership of any actual BTC tokens. Below is a chart showing the path of BTC during this recent decline in the asset.
Looks like the paper plus spot BTC balance has been on the rise on exchanges | Source: @woonomic on X
In the chart, the purple line reflects the combined stock of fiat and spot Bitcoin currently held on the various centralized exchanges in the sector. This stock has been on the rise recently.
However, this surge may also be due to spot deposits rather than fiat Bitcoin being minted. However, as the blue curve shows, spot Bitcoin has been showing a flat trajectory while the overall stock has been increasing. This would confirm that fiat Bitcoin was indeed behind the surge.
In total, an additional 140,000 fiat bitcoins have been printed recently. “Now compare that to the 10,000 bitcoins sold by Germany, and you can see what caused the demand to drop,” Wu says. So derivatives could potentially see a rebound if the cryptocurrency were to make a strong recovery.
While bearish winds are looming over the Mt. Gox and German government selloffs, bullish developments could also be forming for the coin. As the analyst pointed out, exchange-traded funds (ETFs) are starting to show early signs of accumulation.
The trend in the 7-day netflows of the BTC spot ETFs | Source: @woonomic on X
Bitcoin price
Last month was a tough time for Bitcoin holders as the asset’s price dropped by more than 17% and fell to $57,200.
The price of the coin has been riding on bearish momentum recently | Source: BTCUSD on TradingView
Featured image by Dall-E, woocharts.com, chart by TradingView.com
