Traders Dismiss Mt. Gox Redemption Fears Despite Concerns Over $10B BTC Holdings
The trustees of the defunct crypto exchange announced on Monday that they plan to begin distributing bitcoin (BTC) stolen from clients during the 2014 hack in the first week of July.
Traders believe that the selling pressure from Mt. Gox's repayments might be less severe than anticipated, which could ease concerns about an immediate selloff.
Galaxy Research suggests that a significant portion of the distributed Bitcoin may not be immediately sold, as many creditors are likely to hold onto their Bitcoin due to its low-cost basis.
Crypto traders note that the newly announced repayments from Mt. Gox could result in less selling pressure than market observers fear, potentially alleviating concerns about an imminent selloff. Sam Callahan, senior analyst at Swan Bitcoin, mentioned in a Tuesday email to CoinDesk, "The impact on Bitcoin's price from Mt. Gox distributing Bitcoin is likely overblown. Creditors who wanted to sell their Bitcoin have now had more than 10 years to do so by selling their bankruptcy claims to more convicted, long-term investors. In addition, most creditors will likely hold their Bitcoin because their cost basis is less than $700 per Bitcoin."
Galaxy Research highlighted in a Monday note that out of the total 141,000 BTC set for distribution, 65,000 BTC will be delivered to individual creditors, and another 30,000 BTC will be delivered to claims funds and a separate bankruptcy. "It's reasonable to assume that most of the BTC received by funds that acquired claims from creditors will be distributed to LPs in kind and not sold off," the firm stated, which could further ease concerns.
The trustees of the defunct crypto exchange announced that they are preparing to distribute the Bitcoin (BTC) stolen from clients during the 2014 hack in the first week of July. While the exact amount of Bitcoin to be distributed remains unknown publicly, the exchange consolidated 140,000 BTC, worth around $9 billion, from multiple cold wallets to a single address in May.
Expectations of the upcoming selling pressure caused Bitcoin to drop more than 4% on Monday, briefly pushing its price below $60,000 for the first time since early May.
