Why I think Mt.GOX is just a tool for big money/insider traders to harvest retail investors, and the market impact of Mt. Gox may be much smaller than expected:
1. Limited number of distributions:
- Although the trustee holds about 142,000 bitcoins, the actual number of distributions is close to 75,000 bitcoins. This means that the number of bitcoins circulating in the market is relatively limited, which mitigates the impact on the market.
2. Gradual distribution:
- The distribution will be carried out on different dates throughout July and distributed to multiple different exchanges. This distributed distribution method reduces the possibility of large-scale simultaneous sell-offs and helps the market gradually absorb these bitcoins.
3. Some creditors do not plan to sell:
- For example, MtGox Investment Funds ("MGIF") has publicly reiterated that it does not plan to sell its holdings of bitcoins, which reduces the number of bitcoins entering the market.
4. Creditors may hold or only partially sell:
- Given the huge appreciation of bitcoin since its loss (about 13,600%), an immediate sale will bring huge tax events. Therefore, many creditors may choose to sell only a small portion or hold temporarily.
5. Liquidity and market absorption capacity:
- Bitcoin's broad liquidity and asynchronous distribution help the market absorb these bitcoins. The average daily exchange inflow over the past year is about 32,000 bitcoins, and the market has coped with larger inflows (such as the 150,000 bitcoins inflow when the Bitcoin spot ETF was launched).
