Bitcoin Cash Liquidity Worsens Due to Mt.Gox Repayment

Bitcoin Cash Liquidity Worsens Due to Mt.Gox Repayment

Mt.Gox is a defunct Bitcoin exchange that halted operations in 2014 after losing over 850,000 BTC in a hack. In August 2021, Mt.Gox announced that it would begin repaying its creditors in BTC and BCH. While the Mt.Gox repayment has been positive for the overall cryptocurrency market, it has also had a negative impact on the liquidity of Bitcoin Cash (BCH). According to data from Kaiko, "On the fifth day after Mt.Gox announced its repayment, the slippage of BCH on Bybit expanded from 0.2% to 2.8%, and on Itbit, it expanded from 0.3% to 3.5%." Slippage is the phenomenon where the difference between the bid-ask price is abnormally large, and when the actual settlement price is settled at a price less favorable than the order price, it indicates that the liquidity has deteriorated. The deterioration in BCH liquidity is likely due to a number of factors, including: The sale of BCH by Mt.Gox creditors is increasing the supply of BCH on the market, which is putting pressure on prices. The uncertainty surrounding the future of Mt.Gox is making some investors hesitant to buy or sell BCH. It is difficult to say how long the current liquidity issues with BCH will last. However, it is important to note that liquidity can improve quickly if there is a positive catalyst, such as a major partnership or the launch of a new product.