Mt. Gox repayments won’t be as bad for Bitcoin as you think

Mt. Gox’s scheduled repayment of $8.5 billion worth of Bitcoin to creditors next month may not cause as much mayhem for the price of Bitcoin as many expect, say analysts. IG Markets analyst Tony Sycamore told Cointelegraph there were simply too many historical factors to make a concrete prediction about the impact of the upcoming repayments, but estimated around half of the total Bitcoin — roughly $4.5 billion worth — could be set to hit the market beginning in July. Mt. Gox was a Japanese cryptocurrency exchange that collapsed after being hacked in February 2014. The exchange lost around 940,000 BTC, which was worth just $64 million at the time. Mt. Gox recovered 141,687 BTC to return to its creditors, which is worth $8.5 billion as of the time of publication. This sum will start to be paid out to creditors at the beginning of July. Despite the potential upcoming flood of Bitcoin onto the market, Sycamore said he believes that much of the supposed Mt. Gox sell pressure was already priced into the current market conditions. “The repayments have been coming for a long time,” he said. “The repayments are happening against the backdrop of deteriorating market sentiment, technical selling, and outflows from the Bitcoin ETFs,” said Sycamore, adding that much of the speculative “hot money” in crypto had left to chase “greener pastures” in mega-stocks like Nvidia and Apple in the equities market. Speaking to Bitcoin’s price action more broadly, Sycamore said he’s not convinced that the current sell-off can plunge too much deeper. He pointed to strong support on the 200-day moving average as a reason for optimism in the coming weeks. “I think we’ve just had a flush. The cause of the flush is all of these effects culminating in the expectations of Mt. Gox selling,” he said, adding:

“I suspect it probably offers a pretty good entry point for people that have been holding on for better buying levels.”

In a June 25 post to X, Galaxy Digital’s head of research Alex Thorn estimated that only 65,000 of the 141,000 total Bitcoin stands to actually hit the market in full — significantly reducing much of the expected selling activity. Thorn predicted that roughly 75% of creditors have opted to receive an “early” payout, sacrificing 10% of their repayment in the process and resulting in an approximate 95,000 BTC hitting the market initially. Additionally, he added that 20,000 BTC were owed to claims funds, and roughly 10,000 BTC were owed to Bitcoinica BK — leaving just 65,000 to go to regular creditors.

Mt. Gox creditors likely to HODL

Additionally, Thorn explained that there were several reasons to believe that individual Mt. Gox creditors would be more “diamond-handed” than the market expects. He noted that most of the creditors were skewed toward being “long-term Bitcoiners” that are more likely to hold their Bitcoin, and stressed that many individual creditors resisted years of “compelling & aggressive offers” from claims offering USD-payouts, suggesting they wanted their Bitcoin back, not fiat. He also pointed to the impact of capital gains tax on sellers, saying that while original creditors receive only a 15% in-kind recovery, many claim holders have notched a 140 times gain since the bankruptcy proceedings recovered their Bitcoin. Thorn said the potential selling pressure on Bitcoin Cash would likely be “far worse” due to the fact that many investors never actually bought BCH outright, only receiving it due to the hard fork of Bitcoin that occurred in 2017.