The decline of Bitcoin (BTC) has further intensified, falling below $60,000 this morning, after the announcement by Mt.Gox exchange yesterday (24th) that it will begin repaying creditors in early July. The market seems to be concerned that a large amount of Bitcoin may soon flow into the market.
Mt.Gox was an early cryptocurrency exchange that announced bankruptcy in 2014 after losing 850,000 Bitcoins due to a hacker attack. According to data compiled by the online intelligence platform Arkham, Mt.Gox’s wallet holds approximately 141,000 Bitcoins (worth $8.7 billion). However, digital asset investment firm Galaxy believes that the actual amount of coins distributed by Mt.Gox may be less than what most people expect, resulting in less selling pressure on the market than anticipated.
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Alex Thorn, head of research at Galaxy’s research department, stated on the X platform that his research indicates that about 75% of creditors have chosen “early repayment.” This means that approximately 95,000 Bitcoins will be allocated to creditors, of which about 20,000 are owed to the creditor fund and about 10,000 are owed to Bitcoinica BK. The remaining 65,000 BTC will be distributed to individual creditors.
Thorn believes that these individual creditors may be more inclined to “hold” than most people expect. One reason is that they have resisted the notable and aggressive offers from the creditor fund for many years, not to mention the capital gains tax implications involved due to the 140-fold increase in Bitcoin since the bankruptcy. However, Thorn also stated that even if only 10% of these 65,000 Bitcoins are sold, 6,500 BTC (approximately worth $398 million) will be sold on the market, and it is highly likely to be sold on the market. As for the creditor fund, Thorn stated after discussions with some funds that the majority of fund partners are high net worth Bitcoin holders who are looking to purchase Bitcoin at a discount, rather than seeking arbitrage trades for quick profits.
Mt.Gox will repay creditors in the form of Bitcoin and Bitcoin Cash (BCH). Thorn believes that once these coins are distributed, BCH’s relative performance will be worse than BTC, and creditors will sell a larger portion of their coins in the less liquid BCH market.
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Related report: “Mt.Gox announces repayment to creditors in BTC and BCH starting from early July.”