Keep a close eye on the low bitcoin price at Coincheck exchange

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Coincheck resumed withdrawals of Japanese yen on February 13, but withdrawals of virtual currencies such as bitcoin remain restricted and a resumption date is still undecided, the exchangesaid at a news conference on February 13.

It can be assumed there is a large number of people seeking to sell the virtual currency they have deposited with Coincheck based on the assumption that there were many beginner investors among users and remains uncertain when withdrawals can resume. Let’s see how this can affect the market price.

First, let’s estimate bitcoin deposit assets in the Coincheck exchange. When it was hacked, Coincheck had \58 billion worth of NEM tokens. Using this amount as a standard, Coincheck can be estimated to have been handling about \1.5 trillion in bitcoin deposits (about 1.3 million bitcoin at the January 31 market rate).

Based on the following conditions, Coincheck’s February bitcoin balance can be estimated to be about 600,000considering on its balance at February 14 and the estimation of it having handled assets of 1.3 million bitcoin.

Estimated Coincheck bitcoin asset balance: \1.5 trillion yen = 1.3 million bitcoin (*1)

Coincheck January balance: 1.24 million bitcoin (*2)

Estimated Coincheck February balance: Approx. 600,000 bitcoin (*3)

*1:January 31 bitcoin price

*2: Bitcoin Japanese data site

*3: Estimate based on figures available as of February 14

If, for example, the entire outstanding balance of 1.3 million bitcoin was sold, it would possibly affect the bitcoin price until the end of March as the sale would probably need about two months based on the estimated balance. It may take about one week less considering that about 140,000 bitcoin were sold from the time Coincheck was hacked until the end of January.

If Coincheck is able to move on by selling only 50% of its bitcoin deposits and the sales made until the end of January are taken into account, pressure to sell would be just about coming to an end, and pressure from the market to sell may recede. As of 1:30 p.m. on February 15, Coincheck’s bitcoin/yen price was \998,811 against Fisco’s virtual currency exchange price of \ 1,064,510.

Naturally, if Coincheck resumes virtual currency withdrawals, the price difference with other markets will be eliminated, so there’s a need to keep a close eye on Coincheck’s service trends going forward.

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