Crypto News- The Mt. Gox-triggered sell-off in Bitcoin Cash is exacerbated by low liquidity

Crypto News- The Mt. Gox-induced downturn in Bitcoin Cash is compounded by inadequate market liquidity

Crypto News– Bitcoin Cash (BCH), a cryptocurrency formed through a 2017 Bitcoin blockchain split, plummeted 20% last week, marking its largest drop since April, as reported by TradingView and CoinDesk.

The sell-off was triggered by the announcement from defunct exchange Mt. Gox regarding the repayment of approximately $9 billion to creditors, including $73 million in BCH, equivalent to 20% of its daily trading volume. This development sparked panic selling among BCH holders, anticipating potential mass liquidations by Mt. Gox creditors, exacerbated by inadequate liquidity across centralized exchanges, according to Paris-based Kaiko.

Bitcoin Cash (BCH) Faces Steep Decline Amid Mt. Gox Repayments

Kaiko highlighted that in a market with poor liquidity, executing large orders at stable prices becomes challenging, leading to increased price volatility. On July 5, coinciding with Mt. Gox’s repayment announcement, BCH markets on Bybit and Itbit saw slippage rise sharply, indicating worsening liquidity conditions and heightened volatility.

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The liquidity issue has been exacerbated since November 2022, following the bankruptcy of FTX exchange and Alameda Research, a major liquidity provider for alternative cryptocurrencies (altcoins). Kaiko noted that the combination of poor liquidity and heightened selling pressure during the Mt. Gox repayments event resulted in significant slippage increases, particularly on Itbit and Bybit exchanges.

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