Markets
Bitcoin Mt. Gox Payout: $9 Billion Flood About to Hit the Market
According to a report by MacKenzie Sigalos and Ryan Browne for CNBC, A decade after its collapse due to a massive hack, bankrupt Bitcoin exchange Mt. Gox is set to return nearly $9 billion worth of bitcoin to its users, sparking concerns among investors.
CNBC reports that Mt. Gox, once the world’s largest Bitcoin exchange, went bankrupt in 2014 after hacks led to the loss of an estimated 650,000 to 950,000 bitcoins, valued at more than $59 billion at current prices. The impending payout follows a protracted bankruptcy process marked by delays and legal challenges, as detailed by CNBC.
CNBC notes that the court-appointed trustee overseeing Mt. Gox’s bankruptcy proceedings announced that distributions to the roughly 20,000 creditors would begin in early July. These disbursements will include a mix of Bitcoin and Bitcoin Cash. While this is positive news for victims who have waited years for restitution, it has already impacted Bitcoin’s market price, which fell to $59,000 last week during one of the worst weekly declines of the year, CNBC notes.
Analysts CNBC spoke to predict that the release of approximately 141,000 bitcoins, representing about 0.7% of the total supply, could put additional downward pressure on Bitcoin prices.
John Glover, chief investment officer at Ledn, suggests that many Mt. Gox users will likely sell their recovered Bitcoins to lock in substantial gains. James Butterfill, head of research at CoinShares, echoed these concerns, noting that the market is highly sensitive to news of such significant releases.
Historically, large-scale bailouts from centralized trading platforms have influenced Bitcoin’s price, as CNBC points out. Last month, Gemini returned more than $2 billion worth of Bitcoin to users, contributing to negative price movements, CNBC notes.
Despite these concerns, some analysts believe the impact will be short-lived, CNBC mentions. Jacob JosephResearch Analyst at a leading digital asset market data provider CC Dataargues that the market has sufficient liquidity to absorb these sales, and many creditors may opt for early payment, reducing overall selling pressure:
“…a healthy portion of creditors will likely accept a 10% haircut on their holdings to receive early repayment, and not all holdings are scheduled to be liquidated in the open market, reducing overall selling pressure.”
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