Markets
Bitcoin Market Braces for Impact as Mt. Gox Prepares to Return $9 Billion Worth of Coins to Users: ‘Some Will Clearly Choose to Take the Money and Run’
After a decade of bankruptcy, the Tokyo-based bitcoin exchange, Mount Goxis expected to return nearly $9 billion in bitcoin BTC/USD to its users, raising concerns among investors.
What happened: Mt. Gox, which filed for bankruptcy in 2014 following a series of attacks, will begin the payment process in early July, CNBC reported. reported on Monday. The court-appointed administrator overseeing the bankruptcy process confirmed that the disbursements, a combination of bitcoin and bitcoin cash, will be made to about 20,000 creditors.
While the announcement brings relief to victims of the hack, it also caused bitcoin prices to plummet. The cryptocurrency fell to $59,000 last week, marking the second-worst weekly decline of the year.
Analysts predict that the return of approximately 141,000 bitcoins, or about 0.7% of total bitcoins in circulation, could trigger significant selling as investors look to lock in gains. John GloverCIO of cryptocurrency lending firm Ledn has suggested that many Mt. Gox users are likely to withdraw.
“Some will clearly choose to take the money and run,” he added.
Analysts at JPMorgan highlighted that while Mt. Cox’s release of bitcoins could put pressure on cryptocurrency prices in July, the situation will likely recover in August.
James Manteiga, CoinShares’ head of research expressed similar concerns, stating that the announcement of the start of the Trust’s sale in July understandably worried investors who are bullish on Bitcoin. However, he suggested that there is enough market liquidity to cushion the blow of any potential mass-market selling action.
Lennix Lai, commercial director of cryptocurrency exchange OKX, assured that sales concerns would be short-lived.
“Many of Mt. Gox’s early adopters and lenders are long-term bitcoin enthusiasts who are less likely to sell all of their bitcoins immediately,” he added.
Alex Espinhoa crypto analyst at Galaxy Research, predicted that only about 64,000 Bitcoin Of the total, 142,000 BTC will be distributed to individual creditors, with much of it unlikely to be sold immediately. He suggested that the market impact could be minimal, as many Mt. Gox creditors are likely long-term Bitcoin holders who have resisted selling their claims for years.
Why does this matter?: The announcement of refunds was first made last week when the administrator Nobuaki Kobayashi confirmed the news in a statement. This led to a drop in Bitcoin prices from over $62,300 to around US$60,500 in early Asia trading hours. This refund has been long awaited after years of delays.
Mt. Gox was a large cryptocurrency exchange that suffered a massive hack in 2014, losing approximately 740,000 Bitcoins. Trustees have been working on a repayment plan for years, with a deadline set for October 2024 by a Tokyo court.
This incident was the largest of several attacks on the stock exchange between 2010 and 2013.
The trustees have been working on a repayment plan for several years, with a deadline set for October 2024 by a Tokyo court.
Image via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari