Bitrabo Editorial
Recent data indicates that the concept of ‘paper’ Bitcoin has been on the rise while the spot price of the cryptocurrency has experienced a significant drop.
Surge in Paper Bitcoin Amidst Stagnant Spot BTC
Analyst Willy Woo discussed the Bitcoin market’s current state in a recent thread on X. BTC has been facing a bearish trend lately, with factors like the German Government’s sale and Mt. Gox distributions contributing to investor fear.
The German Government sold approximately 10,000 BTC, holding 39,800 BTC currently. Mt. Gox has yet to distribute most of its BTC, returning only 2,700 BTC to owners out of 139,000 BTC in total.
Despite these holdings, the actual selling pressure on the market hasn’t been significant. The main culprit behind Bitcoin’s crash, according to Woo, seems to be the rise of paper BTC.
Paper BTC pertains to derivatives linked to the cryptocurrency that do not require ownership of physical BTC tokens. Recent data indicates an increase in combined paper and spot BTC inventory on centralized exchanges.
The surge in inventory might be due to spot deposits, but while spot BTC remains steady, the overall inventory rise suggests an increase in paper BTC. This recent influx of 140,000 paper BTC likely played a key role in the market downturn.
While challenges loom with the Mt. Gox and German government sell-offs, a positive trend may emerge in spot exchange-traded funds (ETFs) showing signs of accumulation.
Bitcoin’s Recent Price Movement
Bitcoin has faced a tough month with a price decline of over 17%, settling at $57,200.