After 10 years of waiting, Mt. Gox exchange finally announced yesterday (24th) that it plans to repay creditors in cryptocurrency assets starting in July. While the market is concerned about potential massive selling pressure, the head of Galaxy Research believes that investors need not panic excessively.
Summary:
Bitcoin Plunges to $58,300! 900,000 People Liquidated $360 Million, But Altcoins Seem Unaffected.
Background:
Air Raid Alert: Mt. Gox Prepares to Repay 140,000 BTC, Will Bitcoin Crash?
Table of Contents:
Mt. Gox Plans to Begin Repayments in July
Will It Cause a Sharp Decline in Bitcoin?
Analyst: Selling Pressure Will Be Lower Than Expected
After being hacked in 2014 and losing 850,000 bitcoins, Mt. Gox, once the world’s largest bitcoin exchange, is finally compensating creditors after ten years of bankruptcy litigation and multiple delays. It is expected that by October this year, Mt. Gox will repay creditors with 142,000 BTC and 143,000 BCH.
Mt. Gox Plans to Begin Repayments in July
At the end of April, it was reported that many creditors posted on Reddit, stating that they had already received partial cash repayments and predicted that repayments in cryptocurrencies such as bitcoin would be coming soon.
Yesterday (24th), Mt. Gox officially announced that it plans to begin repaying clients with bitcoin (BTC) and bitcoin cash (BCH) in July. The announcement also stated that the necessary information confirmation and exchange with relevant exchanges have been completed to ensure the security and compliance of repayments.
Will It Cause a Sharp Decline in Bitcoin?
After Mt. Gox’s announcement was released yesterday, bitcoin dropped from $62,400 to $60,588 within just 15 minutes and continued to decline, hitting a low of $58,300 before rebounding slightly. As of the time of writing, it was trading at $60,292.
Market investors are discussing whether this will bring more selling pressure to the already sluggish bitcoin. Although the creditors lost these cryptocurrencies about ten years ago and cannot recover 100% of their assets, the cryptocurrency prices have multiplied since then. Now that they can finally retrieve these assets, they may choose to sell, leading to a decline in BTC.
In response to this, Alex Thorn, Head of Galaxy Research, commented on X platform last night, stating that the bitcoin selling pressure caused by Mt. Gox will be lower than expected. He explained that since nearly 75% of the creditors chose early payout (with a 10% discount), there will only be about 95,000 bitcoins used for early compensation (the remaining BTC will take longer to repay). Among them, about 20,000 tokens belong to the claim fund, 10,000 tokens belong to Bitcoinica BK, and the remaining 65,000 tokens are owed to individual creditors. He also predicts that individual creditors will be more inclined to hold bitcoins than the market expects, as they are mainly long-term bitcoin holders and early adopters with keen technical acumen. They have rejected attractive offers from the claim fund for years, indicating that they prefer to retrieve their bitcoins rather than receive compensation in USD. The impact of capital gains tax from selling will be significant. With the price increase, even if only 15% of the physical claims are recovered, the claim holders have already seen a 140-fold increase in the value of their bitcoins since the bankruptcy (in USD terms). Therefore, in conclusion, he believes that the selling pressure on bitcoin will not be as significant as investors imagine. However, BCH may experience more severe declines due to its low liquidity. Finally, he added that all bitcoins will be distributed to creditors’ accounts at Kraken, Bitstamp, or BitGo exchanges. Once the bitcoins are transferred to these platforms, it is expected to take 24 to 72 hours before they appear in the users’ accounts. Investors can observe the flow of the 140,000 bitcoins from Mt. Gox by monitoring Arkham’s analytical data.
Related Reports:
The Worst Exchange: Mt. Gox Repaying $9.5 Billion in Bitcoin, K33 Research: Fear of BTC Dumping
Ten-Year Wait: Mt. Gox Exchange Repays Debts! Will the Repayment of 140,000 BTC Cause a Bitcoin Crash?
Bitcoin Faces Massive Dump from Mt. Gox! Announces Launch of Claims: 200,000 BTC May Be Unlocked in the Next Two Months.