PANews reported on June 24 that in response to Mt. Gox’s disclosure today that it plans to start BTC and BCH compensation in July, Alex Thorn, head of research at Galaxy Digital, said on the X platform: “Based on our analysis, we believe that the number of tokens distributed will be less than market expectations, which will lead to less pressure on Bitcoin selling.”
Thorn analyzed that Mt. Gox had lost about 940,000 bitcoins (worth $424 million at the time), but successfully recovered 15%, or 141,868 bitcoins (worth about $63.9 million at the time), which are now worth up to $9 billion. Although the recovery rate is only 15%, for creditors, this means that their investment has increased 140 times in dollar value. In order to get paid as soon as possible (i.e. "early" payment), creditors need to accept a loss of about 10%. It is estimated that about 75% of the bitcoins chose this option, which means that about 95,000 bitcoins were used for early payment. Among them, about 20,000 bitcoins belong to the claims fund, 10,000 belong to the Bitcoinica bankruptcy case, and the remaining 65,000 belong to individual creditors. These 65,000 BTC/BCH are far lower than the 141,868 bitcoins often reported by the media.
Thorn further pointed out: "I believe that individual creditors will be more patient than the market expects. First, they clearly tend to be long-term Bitcoin holders and are tech-savvy early adopters. Second, they have resisted tempting offers from claim funds for many years, indicating that they prefer to recover their Bitcoin rather than US dollar payments. Third, considering the impact of capital gains, even if it is only a 15% physical recovery, the claim holders have made huge gains on the recovered Bitcoin since the bankruptcy. Nevertheless, if only 10% of the 65,000 Bitcoins are sold, 6,500 Bitcoins will flow into the market, which is likely to be traded on the market. Creditors will receive these Bitcoins and may deposit them into accounts at Kraken, Bitstamp or Bitgo, and most individuals may choose to deposit them directly into trading accounts. Regarding claim funds, from talking to some of them, we learned that they are mainly composed of high-net-worth Bitcoin holders seeking to buy Bitcoin at a discount, rather than credit funds focused on arbitrage trading. Although some LPs may sell Bitcoin, overall, these funds are not mainly composed of traders seeking arbitrage."
Additionally, Thorn predicts that BCH will likely perform worse in the Mt. Gox distribution. First, no creditors initially purchased BCH. Second, BCH is far less liquid than BTC, especially on Kraken and Bitstamp, the two exchanges where creditors will receive the tokens. Therefore, once these tokens are distributed, we believe BCH will perform worse relative to BTC because creditors are more likely to sell BCH in a less liquid market.
