Written by Murtuza Merchant
Compiled by: Vernacular Blockchain
While the massive transfer of Bitcoin has raised concerns about a sell-off, experts say the impact may not be that severe.
Long-awaited reimbursements from Mt. Gox are underway, and while some bitcoin investors worry a massive sell-off could send prices tumbling, early signs suggest users are inclined to hold onto their recovered coins.
Kraken, one of the exchanges that handles repayments, has seen a significant increase in Bitcoin withdrawals, according to CryptoQuant data. Over 5,000 Bitcoins (approximately $329 million) were withdrawn in the past 24 hours.
Many recipients did not cash out immediately, but instead transferred the recovered assets to self-custodial wallets to continue holding them.
“Users withdrawing bitcoin from exchanges and transferring it to secure cold wallets is a sign of their growing concern for the safety and security of their asset custody,” Sharat Chandra, founder of EmpowerEdge Ventures, told Decrypt.
He added that while some selling pressure cannot be ruled out, long-term holders are likely to continue accumulating Bitcoin, which could mitigate large price drops.
Even so, with so many bitcoins in circulation, it is bound to have some impact on the market.
Arkham Intelligence reports that representatives of Mt. Gox moved 32,371 bitcoins (about $2.13 billion) to an unmarked address yesterday, followed by smaller transfers to Bitstamp and another unmarked address. These transfers are part of the exchange’s repayment plan, with funds being spread across multiple platforms before being distributed to users.
Raj A. Kapoor, founder of the Blockchain Governance Council, told Decrypt that the repayment had some impact on the Bitcoin price, but the leading cryptocurrency "quickly stabilized in a strong support range."
As of this writing, Bitcoin is trading at $66,775, according to CoinGecko. Kapoor believes that Bitcoin’s key support level is between $63,000 and $65,000, with technical indicators suggesting a rally to around $67,000 is possible.
Despite initial concerns about potential selling pressure, many experts believe that the market will be able to absorb the influx of Bitcoin without major turbulence.
Eneko Knörr, CEO of stablecoin issuer Stabolut, noted that the repayments will be distributed in multiple batches across major exchanges, which will help mitigate immediate risks.
Knörr added that the German government’s recent sale of nearly $3 billion in Bitcoin did not result in a significant price drop, suggesting that the market is able to absorb such transactions without major turbulence.
“Based on this precedent, it’s unlikely that the impact of Mt. Gox will have a significant impact on the price of bitcoin,” he said.
Marko Jurina, CEO of multi-chain trading platform Jumper, provided a broader view on the current market conditions.
“The market has been range-bound since March, which suggests that the market is either showing resilience or is in an accumulation phase,” Jurina said.
He also pointed to April’s Bitcoin halving event as a historically bullish catalyst that could set the stage for medium-term price gains, coupled with a decline in exchange platform reserves and an increase in cold wallets.
As the repayment process progresses, Kraken has confirmed the successful distribution of Bitcoin and Bitcoin Cash to creditors, and users on Reddit have also reported receiving funds. However, Bitstamp users may still be waiting.
