News that an influential bitcoin holder is taking a break from selling has added to a bullish case for the digital currency.
A trustee of defunct Tokyo bitcoin exchange Mt. Gox sold more than 35,000 bitcoin, worth about $400 million at the time, to pay off creditors, according to details of the sale published by a company trustee last week.
The exchange closed in 2014 and filed for bankruptcy after the theft of 850,000 bitcoin. In order to liquidate Mt. Gox's remaining 166,000 bitcoin, worth about $1.6 billion at Monday's prices, lawyer and trustee Nobuaki Kobayashi said he still needs regulatory approval.
Some reports and Twitter users said the next court hearing is not until September 2018.
"It's still hanging over but now we've got six months or so before that's an issue," Brian Kelly, CEO of BKCM, told CNBC Monday. "In terms of the Tokyo Whale it's a supply issue, but it's also a sentiment issue."
Bitcoin prices briefly recovered into this week. The digital currency rose 6.96 percent from Friday's close to a high of $9,885.22 Monday, according to CoinDesk's bitcoin price index. Prices later fell to $9,241.17 as of 12:40 p.m. ET Monday.
Bitcoin fell below $10,000 and shed nearly 18 percent of its value over two days last week following increased regulatory scrutiny of cryptocurrency exchanges last week.
Bitcoin's one-week performance
In order to pay back creditors, Kobayashi has sold 35,841 Bitcoin and 34,008 Bitcoin cash on behalf of the company since September of last year. This flood of bitcoin could have contributed to recent downward pressure, Kelly said.
"It's down 70 percent from top but at some point you run out of sellers," Kelly said. "It looks as though the market's trying to bottom out."
While the Mt. Gox selling appears to be on hold, bitcoin faces other roadblocks.
News of compromised accounts on a major Hong Kong-based exchange, a statement from the U.S. Securities and Exchange Commission that expanded its scrutiny to cryptocurrency exchanges, and more news from Japanese regulators also added to investor worries last week.
"This is just one factor that's impacting bitcoin at this point," Jack Tatar, managing partner at Doyle Capital Management said.
Some Chicago Board of Exchange, or Cboe, bitcoin futures contracts expire Wednesday, which Tatar said could be adding to bitcoin's downward price moves Monday.
Mt. Gox has "impacted the entire market," Tatar said but it's too soon to say "with this off the table if bitcoin will rise in price."