Mt. Gox Repayments Won’t Have Much Impact on Bitcoin Price Drop, Here’s Why

UTC by Bhushan Akolkar · 3 min read
Mt. Gox Repayments Won’t Have Much Impact on Bitcoin Price Drop, Here’s Why
Photo: Shutterstock

According to Galaxy Digital’s head of research Alex Thorn, approximately 65,000 out of the total 141,000 Bitcoins held by Mt. Gox are expected to enter the market. This could alleviate some of the selling pressure from the anticipated $9 billion liquidations.

Soon after Mt. Gox announced the $9 billion Bitcoin repayment plans in early July, the BTC price came under significant selling pressure on Monday, June 24. The selling pressure was so huge that Bitcoin corrected all the way under $59,000 earlier today before bouncing back to $61,000 as of press time.

However, market analysts believe this to be an overboard reaction adding that the Mt. Gox’s distribution plan may not be the cause of this massive mayhem in the Bitcoin price. IG Markets analyst Tony Sycamore said that markets are considering too many factors about the impact of the upcoming movement. He stated that half of the Bitcoin with Mt. Gox worth $4.5 billion could hit the market in early July.

Despite this major flood of Bitcoins hitting the market next week, Sycamore believes that the supposed selling pressure has been already priced in into the current Bitcoin condition. Speaking to CoinTelegraph, he said:

“The repayments have been coming for a long time. The repayments are happening against the backdrop of deteriorating market sentiment, technical selling, and outflows from the Bitcoin ETFs.”

Sycamore noted that a significant portion of speculative funds in crypto had departed to pursue more promising opportunities in high-cap stocks such as Nvidia and Apple within the equities market.

Japanese crypto exchange Mt. Gox collapsed a decade back in February 2014, losing a total of 940,000 BTC, valued at just $64 million back then. The team at Mt. Gox managed to recover 141,687 BTC and plans to return them to the creditors. the current value of these Bitcoins available for redistribution stands somewhere close to $9 billion.

Is the Bitcoin Bottom Already In?

Discussing Bitcoin’s price movement in a broader context, Sycamore expressed skepticism regarding the potential for further significant declines in the current sell-off. He cited robust support at the 200-day moving average as a factor instilling optimism for the upcoming weeks. Sycamore said:

“I think we’ve just had a flush. The cause of the flush is all of these effects culminating in the expectations of Mt. Gox selling. I suspect it probably offers a pretty good entry point for people that have been holding on for better buying levels.”

In a post on X earlier today, Galaxy Digital’s head of research Alex Thorn also estimated that only 65,000 of the 141,000 total Bitcoins with Mt. Gox will hit the market. Thorn estimated that about 75% of creditors chose an “early” payout, accepting a 10% reduction in their repayment, which initially injected approximately 95,000 BTC into the market.

Furthermore, he noted that 20,000 BTC were allocated to claims funds, and around 10,000 BTC were owed to Bitcoinica BK, leaving approximately 65,000 BTC for regular creditors.

Bitcoin News, Cryptocurrency News, News
Related Articles