After 10 years of waiting, Mt. Gox exchange finally announced yesterday (24th) that it is expected to start repaying creditors with cryptocurrency assets in July. Market concerns about a potential large-scale sell-off have been raised, but the head of Galaxy Research believes that investors do not need to panic excessively.
(Background Summary:
Bitcoin drops to $58,300! 90,000 people liquidated $360 million, but altcoins seem to be unaffected.
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(Background Information:
Air Raid Warning: Mt. Gox prepares to repay 140,000 BTC, will Bitcoin crash?
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Table of Contents
Mt. Gox is expected to start repayment in July
Will it cause a significant drop in Bitcoin?
Analyst: Sell-off will be smaller than expected
Once the largest Bitcoin exchange in the world, Mt. Gox was hacked in 2014, resulting in the theft of 850,000 Bitcoins. After 10 years of bankruptcy litigation and several delays, the compensation process has finally begun. It is expected that by October of this year, Mt. Gox will pay creditors 142,000 BTC and 143,000 BCH.
Mt. Gox is expected to start repayment in July
In late April, it was reported on Reddit that many creditors had already received partial cash repayments and predicted that the repayment of cryptocurrencies such as Bitcoin would be imminent.
Yesterday (24th), Mt. Gox officially announced that it is expected to start repaying customers in July with Bitcoin (BTC) and Bitcoin Cash (BCH). The announcement also stated that the required information confirmation and exchange with relevant exchanges have been completed to ensure the security and compliance of the repayments.
Will it cause a significant drop in Bitcoin?
After Mt. Gox’s announcement yesterday, Bitcoin dropped from $62,400 to $60,588 within just 15 minutes, and continued to decline to a low of $58,300 before rebounding slightly. At the time of writing, it is valued at $60,292.
Market investors are discussing whether this will bring more selling pressure to the already sluggish Bitcoin. After all, even though the creditors lost these cryptocurrencies approximately 10 years ago and cannot fully recover their assets (coin-based), the prices have already skyrocketed. Now that they finally have their assets back, they may choose to sell, leading to a decline in BTC.
In response to this, Galaxy Research’s director Alex Thorn commented on X platform last night, stating that the Bitcoin sell-off triggered by Mt. Gox will be smaller than expected.
He explained that since nearly 75% of the creditors have chosen early payout (accepting a 10% reduction), only about 95,000 Bitcoins will be used for early compensation (the remaining BTC will take longer to be paid). 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 expects that individual creditors will be more inclined to hold Bitcoin than the market expects, as they are primarily long-term holders of Bitcoin and early adopters with technical sensitivity.
Individual creditors have rejected attractive offers from the claim fund over the years, indicating that they prefer to get their Bitcoin back rather than compensation denominated in US dollars. 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 increased the value of their recovered Bitcoins 140 times (in US dollars) since the bankruptcy.
In conclusion, he believes that the sell-off of Bitcoin will not be as large as imagined by investors. However, BCH may experience more severe declines due to its low liquidity.
Finally, he added that all Bitcoins will be distributed to creditors’ accounts on Kraken, Bitstamp, or BitGo exchanges. Once the Bitcoins are transferred to these platforms, it is expected to take 24 to 72 hours for them to appear in users’ accounts. Investors can observe Arkham’s analytical data to keep track of the flow of Mt. Gox’s 140,000 Bitcoins.
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