Anticipated Return of $9B Mt. Gox-era Bitcoin May Spur Market Anxiety
Rebeca Moen Apr 24, 2024 11:55
K33 Research analysts warn that the potential return of over $9 billion worth of Mt. Gox-era Bitcoin could unsettle the market and exert negative price pressure on Bitcoin. Creditors of the now-defunct Mt. Gox crypto exchange have shared updates on their claims, indicating that Bitcoin repayments could begin as early as next month. The sheer quantity of Bitcoin involved could create an "overhang" and potentially impact Bitcoin's price in the coming weeks.
The potential return of over $9 billion worth of Mt. Gox-era Bitcoin in the coming weeks could unsettle the market and exert negative price pressure on Bitcoin, according to analysts at K33 Research. Earlier this week, some creditors of the now-defunct Mt. Gox crypto exchange shared updates on their claims, providing information about the amount of cryptocurrency and fiat owed to them, as well as completed repayment dates.
Mt. Gox Creditors Could Receive Payments Next Month
The new updates suggest that creditors might start receiving their Bitcoin as soon as next month, as noted by K33 Research analysts Anders Helseth and Vetle Lunde in an April 23 market note. The outstanding debt to Mt. Gox's 127,000 creditors amounts to over $9.4 billion in Bitcoin, $72 million in Bitcoin Cash, and $445.8 million in fiat currency (69 billion Japanese yen).
Helseth and Lunde caution that the release of Bitcoin may not necessarily result in immediate selling pressure. However, they emphasize that the substantial "overhang" of 142,000 BTC and 143,000 BCH could "spook the market" . Bitcoin is currently trading at just over $66,700, with recent volatility attributed to changing tensions in the Middle East and the Bitcoin halving that occurred on April 20.
Mt. Gox's Troubled History
The Mt. Gox creditors have been eagerly awaiting the return of their funds for over a decade since the exchange's collapse in February 2014 due to a series of undetected hacks. In January, the Mt. Gox trustee initiated contact with creditors to verify their identities and the crypto exchange accounts that would be used for repaying the owed Bitcoin and Bitcoin Cash. Some creditors had already begun receiving Japanese yen repayments by December of last year, and further fiat transfers were reported in March.
While the final repayment deadline for base repayments, early lump-sum repayments, and intermediate repayments is currently set for October 31, 2024, it remains subject to potential changes.
Potential Impact on Bitcoin's Price
The return of Mt. Gox coins has the potential to significantly impact Bitcoin's price in the coming weeks. The sheer quantity of 142,000 BTC and 143,000 BCH involved could unsettle the market, creating what analysts refer to as an "overhang". This overhang could potentially put negative price pressure on Bitcoin, as investors may anticipate a flood of Bitcoin hitting the market.
Conclusion
The anticipated return of over $9 billion worth of Mt. Gox-era Bitcoin could potentially unsettle the market and negatively impact Bitcoin's price. Creditors of the failed Mt. Gox crypto exchange have reported updates on their claims, suggesting that Bitcoin repayments could begin as early as next month. The sheer quantity of Bitcoin involved could create an "overhang" and potentially impact Bitcoin's price in the coming weeks. Traders and investors will be closely watching the market for any signs of increased volatility or selling pressure.
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