A substantial portion of the Bitcoin being returned by the bankrupt Mt. Gox exchange is set to hit the market, potentially exerting downward pressure on Bitcoin prices.
Finance analyst Jacob King estimates that the Mt. Gox repayments could introduce approximately $8.2 billion worth of selling pressure into the Bitcoin (BTC) market. According to King, recent blockchain transactions indicate that Mt. Gox’s creditors have begun liquidating their holdings. In a statement posted on July 4, King expressed concern:
This grim outlook follows shortly after Mt. Gox initiated the repayment process for its debts in Bitcoin and Bitcoin Cash (BCH), as announced on July 5.
Preview of Mt. Gox BTC distribution. Source: Jacob King
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These predictions raise alarms regarding Bitcoin’s price, which has struggled to gain momentum for more than a month, currently hovering above the psychological threshold of $60,000. Bitcoin has faced a persistent downtrend throughout June, recording an almost 18% decline in the second quarter of 2024.
However, the potential selling activity by Mt. Gox’s creditors could potentially drive Bitcoin back into bearish territory, according to King:
In the 24 hours leading up to 10:17 am UTC on July 5, Bitcoin’s price dropped by 3.9%, trading at $55,250. Data from CoinMarketCap shows that the pioneering cryptocurrency has fallen by more than 10% over the past week.
BTC/USDT, 1-month chart. Source: CoinMarketCap
Despite the looming selling pressure, the repayments represent a positive development for the cryptocurrency industry and the former users of the defunct exchange. This sentiment was echoed by Mark Karpelès, Mt. Gox’s former CEO, in a statement posted on July 5:
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According to the analyst, up to 99% of Mt. Gox creditors might choose to sell their holdings, underscoring the fact that more than $9.4 billion worth of Bitcoin is owed to approximately 127,000 creditors who have patiently awaited recovery of their funds for over a decade.
Given Bitcoin’s staggering 8,500% appreciation over the past decade, it is likely that most creditors of the defunct exchange will seek to secure profits, contributing to the anticipated mass liquidation. King elaborated:
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