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JPMorgan and CoinShares Predict Bitcoin Reset Due to $9 Billion Mt. Gox Settlement
As Mt. Gox prepares to distribute about $9 billion in Bitcoin to its creditors, analysts at JPMorgan and CoinShares predict significant implications for BTC. Mt. Gox was once the largest Bitcoin
before its collapse in 2014. Now, the collapsed exchange is expected to return around 141,000 BTC to users who lost funds during its closure.
Impact of Mt. Gox Refund on Bitcoin
The upcoming payout from Mt. Gox amounts to approximately 0.7% of the total 19.7 million Bitcoins currently in circulation, which represents a significant share. Therefore, the head of research at CoinShares, James Butterfill, expressed concern about the potential market impact of this massive Bitcoin issuance. He pointed out that the issuance of this Bitcoin reserve has long been a concern for those who are bullish on BTC.
Furthermore, it indicates a market sensitivity to news related to such events. Butterfill noted, “With the announcement that the Trust will begin selling in July, investors are understandably concerned,” according to a CNBC report.
Ledn Chief Investment Officer (CIO) John Glover echoed these sentiments. He foresees a scenario where many creditors may decide to sell their Bitcoin to realize gains. Glover noted, “Many will clearly cash in and appreciate the fact that having their assets locked up in the Mt. Gox bankruptcy was the best investment they ever made.”
Furthermore, his observation highlights the dramatic rise in the price of Bitcoin after the closure of Mt. Gox. The price of BTC has risen from around $600 per coin in 2014 to over $63,200 today. Previously, Bitcoin even reached a high of $73,800 in March 2024, potentially due to the launch of Spot BTC ETFs in January.
Furthermore, J.P. Morgan Analysts have also weighed in on the potential impact of Mt. Gox creditors liquidating their bitcoin holdings. They expect the sell-off to put pressure on bitcoin prices in the near term. In a recent research note, JPMorgan analysts said, “Assuming the bulk of Mt. Gox creditor liquidations occur in July, this creates a trajectory where cryptocurrency prices experience additional pressure in July, but begin to recover from August onward.”
Read also: Breaking News: US Government Shifts $12M Ethereum, Is a Bitcoin-Style Fire Sale Coming?
Gemini Effect to continue with the reimbursement of Mt. Gox
The anticipation of these Bitcoin sales follows a similar pattern seen with Gemini, another cryptocurrency exchange. Earlier last month, Gemini returned over $2 billion worth of Bitcoin to users in June. This event coincided with a significant recovery in Bitcoin’s price after Gemini resumed withdrawals from its Earn lending program, which had been suspended months earlier.
Analysts at JPMorgan also drew parallels to this recent event. They noted that the return of funds from Gemini led to negative price movements as retail customers likely took profits from Bitcoin. They also suggested that a similar scenario could play out with Mt. Gox creditors.
JPMorgan analysts expected that some creditors would choose to sell their Bitcoin holdings to capitalize on the cryptocurrency’s impressive gains. Furthermore, a worrying sell-off trend was noted for the German and US governments. Today, the German government transferred another 400 BTC to Coinbase, Kraken, and Bitstamp.
The latest sell-off pushes the German government’s total Bitcoin sell-off to over 2,700 BTC since June. Additionally, the US government divested a whopping 4,000 BTC last month. These sell-offs have had a huge impact on the price of Bitcoin due to the FUD in the market.
Furthermore, only the announcement of Mount Gox Refunds pushed the price of BTC to $59,000 in June. This suggests that with the actual payment, the price of Bitcoin may be poised for further decline. Additionally, miner capitulation has increased due to the massive drop in hash price, suggesting further sell-offs.
Read also: Breaking News: German Government Gives Away 400 BTC to Major Exchanges, Transfer Madness Continues