Kaiko: BTC and BCH market depths have reached pre-FTX crash levels, which may ease Mt.Gox repayment pressure

Kaiko said in the latest market analysis report that last Tuesday, Mt.Gox cold wallets transferred 141,000 BTC to a new wallet starting with 1JbezD, worth about $9.2 billion. Mt.Gox confirmed that the transfer was to prepare for the creditor repayment deadline on October 31. This unexpected activity from dormant accounts triggered a wave of selling pressure in the market. A reliable indicator of this selling pressure is the cumulative volume delta (CVD), and BTC's cumulative volume delta totaled negative $120 million between last Wednesday and Sunday, indicating that there were more sellers than buyers. Hourly trading volume shows that trading activity increased significantly on May 28 after the first transfer from the Mt.Gox wallet. Between last Tuesday and Wednesday, hourly selling activity significantly exceeded buying activity, causing Bitcoin's CVD to fall sharply. Mt.Gox will repay creditors in BTC, BCH and fiat currencies. Whether creditors decide to sell their positions is uncertain and is likely to depend on the market's ability to absorb large orders. It is important to note that market depth for both BTC and BCH has increased by about 30% to pre-FTX crash levels, which could help mitigate potential price volatility if a sell-off occurs soon. However, the difference between the two assets is large in terms of the dollar amount of available liquidity. BCH has significantly lower liquidity than BTC, with an average daily depth of only $9 million, just 3.5% of BTC's depth. Currently, BCH's bid-side depth is only $4.8 million, meaning that a sell order of the same size could cause BCH's price to fall by 1%. BCH's market depth is much lower than it was in September 2021 when prices were similar. This suggests that the Mt.Gox repayment could have a significant impact on BCH if creditors sell their assets.