Mt. Gox’s $9 Billion Bitcoin Payback: What It Means for the Market
After a decade of waiting, Mt. Gox creditors are finally set to receive their $9.2 billion in Bitcoin, but the impending dump has many wondering how it will impact the market. The Rehabilitation Trustee has announced that the repayment process will begin in July, with a deadline of October 31 for all repayments to be made.
Creditors to receive long-awaited Bitcoin repayments
Mt. Gox, once one of the largest crypto exchanges, handled around 70% of all Bitcoin trades before its 2014 collapse. The bankruptcy left creditors and their $9.2 billion worth of Bitcoin in limbo, but that’s all about to change.
The question on everyone’s mind is how this massive influx of Bitcoin will affect the market. Will it stall the current rally, or will the market be able to absorb the selling pressure?
Price Impact
Bitcoin’s price has already taken a hit, in part due to jitters about the impact of the Mt. Gox dump. However, Brian Dixon of crypto hedge fund Off The Chain Capital, which has purchased Mt. Gox claims, says his firm will be “very methodical” about selling the Bitcoin it receives. Dixon’s firm has a significant stake in the game, with the Mt. Gox position making up almost a fifth of their fund.
Bitcoin’s price has taken a hit in recent weeks
“We’re going to start looking at other opportunities where we can get other crypto assets at a discount, because that’ll help us outperform Bitcoin,” Dixon said in March. “But that doesn’t mean we’re going to try to sell all at once.”
Brad Howell, managing director of crypto market maker Keyrock UK, agrees that the market can absorb the selling pressure. According to Howell, the impact of Mt. Gox on the market will be heavily influenced by sentiment, not actual market dynamics.
“It is fair to assume that anyone who had assets in Mt. Gox is an early adopter, and more likely to lean towards the Bitcoin maxi end of the spectrum,” Howell said. “In other words, the types that piled their Bitcoin into Mt. Gox are likely to HODL, or hold tight onto their crypto.”
Diehard Bitcoin enthusiasts are likely to hold onto their crypto
“Don’t expect huge volumes to be dumped on day one,” Howell added.
As the Mt. Gox repayments begin, all eyes will be on the market to see how it reacts to the influx of new Bitcoin. One thing is certain: it’s going to be an interesting few months for Bitcoin enthusiasts.
