Author: Tom Mitchelhill, CoinTelegraph; Translated by: Deng Tong, Golden Finance
Mt. Gox is set to repay $8.5 billion worth of bitcoin to creditors next month, which analysts say may not have as big an impact on bitcoin prices as many expect.
IG Markets analyst Tony Sycamore noted that there are too many historical factors to make specific predictions about the impact of the upcoming repayments, but estimated that about half of the Bitcoin - worth about $4.5 billion - could begin to enter the market in July.
Mt. Gox was a Japanese cryptocurrency exchange that collapsed after being hacked in February 2014. The exchange lost approximately 940,000 BTC, which was worth only $64 million at the time.
Mt. Gox has recovered 141,687 BTC to return to creditors, worth $8.5 billion at press time. The payment will begin to be made to creditors in early July.
While bitcoin may be about to flood the market, Sycamore said he believes much of the so-called Mt. Gox selling pressure is already reflected in current market conditions.
“The repayments have been going on for a long time,” he said.
“The repayments come amid deteriorating sentiment, technical selling and outflows from Bitcoin ETFs,” Sycamore said, adding that much of the speculative “hot money” in the crypto space has left to chase “greener pastures” in the stock market in large-cap stocks like Nvidia and Apple.
Speaking about broader Bitcoin price action, Sycamore said he does not believe the current sell-off will go much further, pointing to strong support at the 200-day moving average as reason for optimism in the weeks ahead.
“I suspect this may provide a fairly good entry point for those who have been holding out for higher buy levels.”
In a June 25 post, Alex Thorn, head of research at Galaxy Digital, estimated that only 65,000 of the 141,000 Bitcoins actually entered the market — significantly reducing the expected sell-off.
Thorn predicts that approximately 75% of creditors chose to accept “early” payments, sacrificing 10% of repayments in the process, resulting in approximately 95,000 BTC entering the market.
Furthermore, he added that the claims fund is owed 20,000 BTC and Bitcoinica BK is owed around 10,000 BTC, leaving only 65,000 BTC to go to general creditors.
Source: Galaxy Research
Mt. Gox creditors may hold onto BTC for the long term
Additionally, Thorn explained that there are several reasons to believe that individual Mt. Gox creditors will be more “generous” than the market expects.
He noted that most creditors tend to be “long-term Bitcoin holders” and are more likely to hold Bitcoin, and stressed that many individual creditors have resisted “compelling and aggressive proposals” in their claims for years to provide U.S. dollar payments, suggesting that they want their Bitcoin back, not fiat currency.
He also pointed out the impact of capital gains taxes on sellers, saying that while original creditors received only 15% of their recovery in kind, many creditors have seen their gains increase 140 times since the Bitcoin was recovered in bankruptcy proceedings.
Thorn said the potential selling pressure on Bitcoin Cash could be “much more severe” because many investors never actually purchased BCH directly and only received it as a result of the Bitcoin hard fork that occurred in 2017.