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Mt. Gox Activates Wallets Ahead of $9 Billion Bitcoin and BCH Payment. What Next?
In the last few hours, several Mt. Gox wallets have been involved in transactions in view of the pending refunds worth $9 billion Bitcoin (BTC) and Bitcoin Cash (BCH). These transactions were reported by Arkham Intelligence, which identified activity in three wallets associated with the now-defunct exchange. Mt. Gox’s “doomsday” is approaching this month and could eventually lead to a Bitcoin price crash, as BTC has hit $57,000 today.
Mt. Gox Activates Wallets in Preparation for Refund
The largest of the latest transactions involved just $24 worth of Bitcoin. Historically, significant movements of Mt. Gox funds have resulted in consolidations in a few major wallets. In this case, a wallet that once held $24 worth of Bitcoin as an intermediary forwarded the small amount to another wallet. That wallet then sent the funds to Bitbank’s hot wallet, according to Arkham Intelligence
data.
Additionally, the remainder of the Bitcoin has been transferred to a new wallet. For context, Bitbank is among the cryptocurrency exchanges designated to facilitate Mt. Gox refunds. Instead of being sent directly to Bitcoin holders, the funds will be distributed to five exchanges. These include Bitstamp, Bitstamp, Bitbank, SBI VC Trade, and Bitgo.
Additionally, these exchanges have assured customers that the funds will be accessible within 90 days of receipt. However, the nature of these small transactions raises questions about whether they serve as a test for larger transfers. The trustee has previously indicated that refunds would begin in early July. However, the exact dates for the refunds of funds to exchanges remain undisclosed.
The anticipation of these refunds has had a significant impact on the cryptocurrency market. In the past month, the price of Bitcoin has plummeted by more than $12,000. At press time, the Bitcoin Price was $57,675, down 4.19% over the past 24 hours.
Further accelerating the market downturn, the German government dumped another 1,300 Bitcoins on major cryptocurrency exchanges, worth nearly $76 million. This action caused the price of Bitcoin to fall below $58,000 shortly after the liquidation. Additionally, the government moved 1,700 Bitcoins worth $98.76 million to an unknown wallet, raising speculation of an impending sell-off.
Read also: Breaking News: German Government Dumps Another 1300 Bitcoins on Coinbase, Kraken, Bitstamp
What will be the future of the BTC price?
Mt. Gox’s upcoming $9 billion repayments represent about 0.7% of the 19.7 million bitcoins currently in circulation. This significant amount adds to fears of a sell-off by lenders looking to cash in, given that bitcoin was priced around $600 when Mt. Gox collapsed. Today, lenders could earn nearly 100 times their initial investment.
James Butterfill, head of research at CoinShares, expressed concern about the market impact of this substantial Bitcoin issuance. He noted, “With the announcement that the Trust will begin selling in July, investors are understandably concerned,” according to a CNBC report. Butterfill also noted that this Bitcoin reserve issuance has long been a concern for bullish BTC investors.
Likewise, J.P. Morgan Analysts have been weighing the potential impact of Mt. Gox creditors liquidating their holdings. They expect the sell-off to put near-term pressure on Bitcoin prices. 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 rebound from August onward.”
Furthermore, Bitcoin long liquidations reached $77.67 million between the German government dump and the expected Mt. Gox payments. This suggests an accelerated collapse of Bitcoin. Also, a point to note is that BTC was only worth $600 when Mt. Gox collapsed in 2014, leaving creditors with 100 times more profits. Hence, they could realize these profits immediately after the payment, which could cause a massive correction in the price of BTC.
Read also: Cryptocurrency Market Crash: Why Bitcoin and Altcoins Are Crashing