Long Bitcoin and Short Bitcoin Cash to Benefit From Mt. Gox Repayments: Trader

Singapore-based trading firm Presto Labs is suggesting clients bet on bitcoin (BTC) strength and against bitcoin cash (BCH) in a market-neutral trade to profit from the ongoing Mt. Gox repayments.
Hundreds of millions worth of BTC hit the market last week as defunct exchange Mt. Gox finally began its long awaited repayments to creditors impacted in a 2014 hack. Over $73 million worth of BCH is set to be distributed to traders in the coming months, compared to $9 billion worth of BTC.
“The Mt. Gox’s Rehabilitation Trustee plans to distribute multi-billion dollars worth of BTCs and BCHs between July 1st and October 31st, 2024,” Presto market analysts led by Peter Chung told CoinDesk in a note Wednesday. “This can create a shift in supply/demand dynamics in BTC and BCH during this 4-month period, potentially opening up a pair trading opportunity.
Pair trading is a trading strategy that involves buying and selling two financial assets simultaneously to profit from their relative price movements.
“Our analysis shows that the selling pressure for BCH will be four times larger than for BTC – i.e. 24% of the daily trading value for BCH vs. 6% of the daily trading value for BTC. Long BTC perpetuals paired with short BCH perpetuals is the most efficient market-neutral way to express this view, barring funding rate risk,” Chung added.
CoinGecko data shows over $27 billion worth of BTC exchanged hands in the past 24 hours, compared to $180 million of BCH.
Presto further assumes that investors who held bitcoin at its earlier stages are likely to be “diamond-handed wealthy Bitcoiners,” and thus more likely to hold part of their repayments instead of selling the asset outright.
However, “100% will be the “much weaker investor base” of BCH could see 100% sold in the near term, Presto said.
Edited by Parikshit Mishra.
Disclosure
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.
Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.