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Mt.Gox $9 Billion Refund Begins Today! How Will the Crypto Market React?
Bitcoin just returned to $63,350, a 4% jump that pares some of June’s losses. But can this really be called a return? Probably not; as sentiment towards Bitcoin and the broader cryptocurrency markets remains cautious.
An impending event threatens to throw the cryptocurrency market into chaos once again. What is it, and will it sink Bitcoin or create a buying opportunity? Read on to find out.
Concerns over Mt. Gox move
Investors are fearing a major liquidation event, as the now-shuttered Mt. Gox exchange is set to begin distributing recovered tokens this week.
Mt. Gox, a once major cryptocurrency exchange that went bankrupt a decade ago following a significant cyber attack, will begin distributing Refunds in Bitcoin to creditors this week. These creditors, who have been waiting years for compensation, are set to receive about $9 billion in Bitcoin at today’s prices.
It’s been a long struggle
In 2011, Mt. Gox lost approximately 950,000 bitcoins in a hack, an impressive figure given Bitcoin’s all-time high value. $32 per BTCAbout 140,000 of those bitcoins were later recovered and are now worth around $9 billion, reflecting a huge increase in value.
From July to October, Mt. Gox creditors will receive 142,000 bitcoins, worth about $9 billion at current prices. Although there is an October deadline, JPMorgan analysts believe the bulk of the repayments will occur in July.
Get ready for market pressure!
JPMorgan analysts suggest that some Mt. Gox creditors may sell some of their Bitcoin claims this month, potentially putting initial pressure on cryptocurrency markets.
This expectation is supported by a slight decline in JPMorgan’s Bitcoin Futures Position Indicator based on CME futures, which suggests that it has been primarily retail clients, not institutional investors, who have been selling their cryptocurrency holdings recently.
What to expect now?
However, analysts expect the market to recover starting in August, partly due to the impending cash refunds from another bankrupt cryptocurrency exchange. FTX.
FTX, another bankrupt cryptocurrency exchange, will also repay its creditors in the coming months, but these repayments will be in cash. Estimated at between $14 billion and $16 billion, these repayments are expected shortly after the final approval of FTX’s liquidation plan on October 7.
These funds could potentially support cryptocurrency markets, as native cryptocurrency creditors could reinvest their repayments into digital assets.
Will the Mt. Gox redemption cause a crypto sell-off or is this a buying opportunity? Share your thoughts.