After the bankrupt Bitcoin exchange Mt. Gox initiated repayments, it has been identified as a major factor driving recent Bitcoin downturns, with potential sell-offs possibly ongoing. Mt. Gox creditors indicate the repayment phase could extend until October. Analysts warn that Bitcoin dropping below the critical level of $52,200 may trigger further sell-offs.
Mt. Gox, once the world’s largest Bitcoin exchange, was hacked in 2014, resulting in the theft of 850,000 bitcoins. After a decade-long bankruptcy litigation, reimbursements began in July, with Mt. Gox expected to pay creditors 142,000 BTC and 143,000 BCH by October this year.
On the 5th, Mt. Gox announced it had started repaying creditors through various cryptocurrency exchanges, but exact timing of repayments varies depending on where creditors receive them. The initiation of repayments by Mt. Gox, along with recent large Bitcoin transfers by the governments of Germany and the United States to exchanges, suspected for liquidation, are seen as key drivers behind Bitcoin’s recent downturns, hitting a weekly low of $53,485, the lowest since February.
According to Arkham Monitoring, on the 5th, Mt. Gox transferred 47,229 BTC ($2.71 billion) from cold wallets, including 1,544.7 BTC ($84.9 million) sent to Bitbank exchange and another 1,157.1 BTC sent to an unknown address, possibly another repayment exchange.
Concerns linger over ongoing Mt. Gox sell-offs. Mt. Gox creditors and Off the Chain Capital CEO Brian Dixon noted many creditors have yet to receive reimbursements, suggesting the repayment phase may continue until October. However, Stephane Ouellette, CEO of FRNT Financial Inc., believes the market may have overreacted to Mt. Gox’s repayment events, suggesting that Germany’s liquidation of $2.3 billion worth of Bitcoin could pose a more direct threat to the market.
Further sell-offs may be imminent. Analyst Axel Adler Jr. cautioned that ordinary investors currently hold an 84% unrealized profit on Bitcoin. A price near the $52,200 average (PR Bands) could reduce this profit by about 14%, potentially prompting sell-offs as investors might opt to secure gains amid fears of further price declines.
Axel Adler Jr. highlights $46,400 as a critical price level to watch, being the average Bitcoin purchase price over the past year.