One of the most anticipated and feared events in the Bitcoin (BTC) market is almost here: refunds to affected users of Mt. Gox, the Japanese exchange that went bankrupt in 2014 and was, at the time, the largest in the world.
Compensation of Mt. Gox creditors in Bitcoin and Bitcoin Cash (BCH) will begin in early July 2024. The exchange’s rehabilitation trustee announced the news yesterday, CriptoNoticias reported.
The total compensation amounted to 142,000 BTC, 143,000 BCH, and 69 billion Japanese Yen (JPY). Currently, this total is equivalent to more than $9 billion (USD), almost all of which is equivalent to Bitcoin ($8.5 billion).
In the decade since the exchange went bankrupt, the price of Bitcoin has risen from around $500 to over $60,000. Meanwhile, its users remain unable to access their balances and watch their every communication to comply with requests to restore their balances.
As a result, there are widespread concerns in the market about the impact that the Mt. Gox refund may have on the price of Bitcoin. Some worry that if creditors sell their holdings for a profit after receiving the money, it will create huge supply pressure, causing the price to fall.
However, over time, this concern has dissipated as demand has grown and has been able to absorb the supply from Mt. Gox creditors. In fact, just look at the purchases of the U.S. Bitcoin exchange-traded fund (ETF) launching in early 2024.
Since the launch of these ETFs, their holdings of 621,000 BTC (from Grayscale funds (GBTC) previously listed outside the stock exchange) have increased to 870,000 BTC. This means that they have acquired 250,000 BTC in just 5 months of listing, with a cumulative inflow of $14 million.
Amount of BTC in US Bitcoin ETFs since launch.
In other words, demand for these ETFs alone almost doubled the amount of Bitcoin that Mt. Gox released into the market. Therefore, in the medium term, sales by creditors may be balanced by purchases of such instruments without generating huge turbulence.
Moreover, according to Standard Chartered Bank’s estimates, Bitcoin ETF inflows will reach $75 billion by 2025, driving Bitcoin’s appreciation. Positive forecasts such as interest rate cuts this year and next make this possible. Therefore, a possible offer from Mt. Gox creditors is not a long-term concern.
It should also be considered that those who received refunds in Bitcoin have rejected the possibility of getting refunds in fiat currency. In their ongoing struggle to recover their holdings, this decision demonstrates their best interest in retaining the currency rather than selling it. Therefore, there is not necessarily strong profit-taking.
As the exchange’s reorganization trustee indicated, repayments will also be made gradually, so sales by creditors can take place over time without causing a price crash.
Regardless, if ETF outflows continue (as seen in the past two weeks as shown in the chart below) and market supply increases, prices could come under downward pressure until demand returns. BTC is currently trading 15% below its all-time high of $73,700 reached more than three months ago.
Daily capital inflows (green) and outflows of the US Bitcoin ETF since its launch. Speculative funds are currently appearing in the Bitcoin market
IG Markets analyst Tony Sycamore said the decline was partly due to speculative "hot money" outflows in search of rising markets. "The reason for the liquidations is that all of these effects are ultimately leading to people looking to sell Mt. Gox," he said.
Currently, Bitcoin is trading at $61,000, close to the lows recorded during the past four months of sideways movement. If this level is lost, it could retest the support area between $56,000 and $60,000 shown below.
Bitcoin price in 2024 so far.
However, for Sycamore, the current drop does not represent anything negative in the long run, as new demand could emerge in addition to the Mt. Gox release. “I suspect this could provide a fairly good entry point for people who have been waiting for better buying levels,” he concluded.
#BTC☀️ #ETH🔥🔥🔥🔥🔥🔥 #etf以太坊 #BTC☀ #ETH🔥🔥🔥🔥
Want to know more about the first-hand information and in-depth analysis of the cryptocurrency circle? Click on the avatar to read my introduction to the cryptocurrency industry. I will bring you the latest market analysis and high-quality potential cryptocurrency recommendations every day! ! !
