Analysts say that the upcoming repayment of $8.5 billion worth of Bitcoin (BTC) by Mt. Gox to creditors next month may not have as significant an impact on the price of Bitcoin as many anticipate.
Tony Sycamore, an analyst at IG Markets, explained to Cointelegraph that there are numerous historical factors to consider when predicting the impact of these repayments. He estimated that around half of the total Bitcoin, roughly $4.5 billion worth, could be expected to hit the market beginning in July.
Mt. Gox was a Japanese cryptocurrency exchange that collapsed after being hacked in February 2014, losing around 940,000 BTC, which was worth just $64 million at the time. Mt. Gox has since recovered 141,687 BTC to return to its creditors, which is now worth $8.5 billion. These repayments will begin in July.
Despite the potential flood of Bitcoin onto the market, Sycamore believes that much of the Mt. Gox sell pressure has already been factored into the current market conditions. He noted that the repayments have been anticipated for some time and are happening alongside negative market sentiment, technical selling, and outflows from Bitcoin ETFs. This has led to much of the speculative “hot money” in crypto moving towards other investment opportunities in the equities market.
Sycamore also expressed optimism about Bitcoin’s price action, pointing to strong support on the 200-day moving average as a reason for hope in the coming weeks. He believes that the market has already experienced a significant sell-off and may not plunge much deeper.
Alex Thorn, the head of research at Galaxy Digital, estimated that only 65,000 of the 141,000 total Bitcoin stands to actually hit the market, significantly reducing the expected selling activity. He also predicted that roughly 75% of creditors have opted for an “early” payout, resulting in approximately 95,000 BTC hitting the market initially.
Thorn explained that there are several reasons to believe that individual Mt. Gox creditors would be more likely to hold onto their Bitcoin. Many of the creditors are long-term Bitcoin holders who resisted offers of USD payouts in the past, suggesting that they want their Bitcoin back, not fiat. He also pointed out the impact of capital gains tax on sellers and the potential selling pressure on Bitcoin Cash (BCH).
Overall, analysts believe that the upcoming Mt. Gox repayments may not cause as much upheaval in the Bitcoin market as expected, and that many creditors may choose to hold onto their Bitcoin rather than sell immediately.