Mt. Gox’s $9 billion Bitcoin payout to creditors is expected to have significant market implications, according to JPMorgan and CoinShares analysts.
As Mt. Gox prepares to distribute approximately $9 billion in Bitcoin to its creditors, analysts from CoinShares and JPMorgan anticipate substantial implications for BTC.
Before its collapse in 2014, Mt. Gox was the largest Bitcoin exchange. Currently, the exchange that imploded is scheduled to reimburse approximately 141,000 BTC to users who experienced losses during its demise.
Mt. Gox’s forthcoming payout represents approximately 0.7% of the 19.7 million Bitcoins that are presently in circulation, which is a substantial stake.
Consequently, James Butterfill, the Head of Research at CoinShares, expressed apprehension regarding the potential market influence of this substantial Bitcoin release. He emphasized that releasing this Bitcoin reserve has been a source of concern for those who are optimistic about BTC for an extended period.
Additionally, it suggests that the market is susceptible to news concerning such events. According to a report by CNBC, Butterfill observed that investors are understandably concerned following the announcement that the Trust will commence selling in July.
These sentiments were reiterated by John Glover, the Chief Investment Officer (CIO) of Ledn. He anticipates a situation in which numerous creditors may elect to sell their Bitcoin in order to realize profits.
Glover stated, “It is evident that a significant number of individuals will cash out and derive pleasure from the fact that their assets are stuck in the Mt. Gox bankruptcy, which they regard as the most advantageous investment they have ever made.”
Furthermore, his observation emphasizes the substantial rise in the Bitcoin price that has occurred since the closure of Mt. Gox. The price of Bitcoin has increased from approximately $600 per coin in 2014 to over $63,200 today. In March 2024, Bitcoin reached a high of $73,800, which may have been influenced by the introduction of Spot BTC ETFs in January.
Additionally, JPMorgan analysts have expressed their opinions regarding the potential consequences of Mt. Gox creditors liquidating their bitcoin holdings. In the immediate term, they expect that the sell-off could exert pressure on bitcoin prices.
In a recent research note, JPMorgan analysts stated, “Assuming the majority of the liquidations by Mt. Gox creditors occur in July, this results in a trajectory where crypto prices experience additional pressure in July but begin to rebound from August onward.”
The pattern of anticipation for these Bitcoin transactions is comparable to that of Gemini, another cryptocurrency exchange. In June of the previous month, Gemini returned more than $2 billion in Bitcoin to its consumers.
After Gemini resumed withdrawals from its Earn lending program, suspended months prior, this incident occurred concurrently with a substantial increase in the price of Bitcoin.
Analysts at JPMorgan also identified similarities to this most recent occurrence. They noted that the return of funds from Gemini led to negative price movements as retail customers likely took Bitcoin profits. In addition, they suggested a similar scenario might unfold with Mt. Gox creditors.
JPMorgan analysts anticipated that certain creditors would elect to liquidate their Bitcoin investments to capitalize on the cryptocurrency’s remarkable growth. Additionally, the German and U.S. governments have observed an alarming selloff trend. Coinbase, Kraken, and Bitstamp received an additional 400 BTC from the German government today.