Despite fears that the upcoming Mt. Gox repayments could trigger a Bitcoin price collapse, experts believe the impact may be minimal.
Repayments and Market Concerns
Starting in July, Mt. Gox, a defunct crypto exchange, will distribute 142,000 BTC (approximately $9 billion) to creditors. This news sent shockwaves through the market, leading to over $313 million in liquidations.
Less Than Half of BTC Available for Sale
However, Alex Thorn, head of research at Galaxy, suggests that less than half of the coins will be available for sale on the open market. This is because:
- 75% of creditors accepted a 10-11% haircut for early payouts, reducing the number of BTC for delivery to 94,600.
- Many creditors sold their bankruptcy claims to funds at a discount, and these funds are unlikely to sell their BTC holdings.
Funds Holding BTC for Long Term
Thorn believes that funds that purchased bankruptcy claims will hold the BTC they receive. They purchased these claims to provide liquidity to high-net-worth Bitcoiners who wanted to acquire Bitcoin at a discount.
Bitcoinica’s Delayed Sale
Bitcoinica, another crypto exchange, is set to receive 10,000 BTC but cannot sell it immediately due to its ongoing bankruptcy proceedings in New Zealand.
Early Bitcoiners Likely to Hold
Thorn estimates that 64,000 BTC will be distributed to creditors’ trading accounts. He believes these individuals are early Bitcoiners who are more likely to hold their coins rather than sell them.
Conclusion
Thorn concludes that the Mt. Gox repayments are unlikely to cause significant selling pressure on Bitcoin. He believes that the majority of the coins will be held by long-term investors who are not interested in selling.
