As Mt. Gox prepares to distribute approximately $9 billion worth of Bitcoin to its creditors, analysts from JPMorgan and CoinShares anticipate significant implications for BTC. Mt. Gox was once the largest Bitcoin
exchange before its collapse in 2014. Now, the collapsed exchange is set to return roughly 141,000 BTC to users who lost funds during its demise.
Mt. Gox Repayment Impact On Bitcoin
The impending payout by Mt. Gox amounts to about 0.7% of the total 19.7 million Bitcoin currently in circulation, which is a significant stake. Hence, Head of Research at CoinShares, James Butterfill, expressed concern over the potential market impact of this massive Bitcoin release. He highlighted that the release of this Bitcoin reserve has long been a worry for those bullish on BTC.
Moreover, it indicates a sensitivity in the market to news related to such events. Butterfill noted, “With the announcement that the Trust will begin selling in July, investors are understandably worried,” according to a report by CNBC.
John Glover, Chief Investment Officer (CIO) of Ledn, echoed these sentiments. He foresees a scenario where many creditors might opt to sell their Bitcoin to realize gains. Glover remarked, “Many will clearly cash out and enjoy the fact that having their assets stuck in the Mt. Gox bankruptcy was the best investment they ever made.”
In addition, his observation underscores the dramatic increase in the Bitcoin price since Mt. Gox’s closure. The BTC price has soared from around $600 per coin in 2014 to over $63,200 today. Earlier, Bitcoin even attained a high of $73,800 in March 2024, potentially due to the launch of Spot BTC ETFs in January.
Furthermore, JPMorgan analysts have also weighed in on the potential impact of Mt. Gox creditors liquidating their bitcoin holdings. They anticipate that the sell-off could put pressure on bitcoin prices in the short term. In a recent research note, JPMorgan analysts stated, “Assuming most of the liquidations by Mt. Gox creditors take place in July, this creates a trajectory where crypto prices come under further pressure in July, but start rebounding from August onwards.”
Also Read: Breaking: US Govt Moves $12M Ethereum, Is Bitcoin-Style Selloff Incoming?
Gemini Effect To Continue With Mt. Gox Repayment
The anticipation of these Bitcoin sales follows a similar pattern observed with Gemini, another crypto exchange. Earlier, last month, Gemini returned over $2 billion worth of Bitcoin to users in June. This event coincided with a significant recovery in the Bitcoin price after Gemini resumed withdrawals from its Earn lending program, which had been suspended months earlier.
Analysts at JPMorgan also drew parallels to this recent event. They noted that the return of funds from Gemini led to negative price movements as retail customers likely took Bitcoin profits. In addition, they suggested a similar scenario might unfold with Mt. Gox creditors.
JPMorgan analysts expected that some creditors would choose to sell their Bitcoin holdings to capitalize on the crypto’s impressive gains. Moreover, a concerning selloff trend has been noted for the German and U.S. governments. Today, the German government offloaded another 400 BTC to Coinbase, Kraken, and Bitstamp.
The latest dump pushes the German government’s total Bitcoin selloff to over 2,700 BTC since June. In addition, the U.S. government divested a staggering 4,000 BTC last month. These selloffs had a massive impact on the Bitcoin price due to FUD in the market.
Moreover, just the announcement of Mt. Gox repayments pushed the BTC price down to $59,000 in June. This suggests that with the actual payout, the Bitcoin price could be poised for a further downfall. Additionally, miner capitulation has increased due to a massive drop in hashprice, hinting at further selloffs.
Also Read: Breaking: German Govt Dumps 400 BTC To Major Exchanges, Transfer Spree Continues
