Mt.Gox is currently working towards repaying its creditors a significant amount of $9.4 billion, potentially causing a sell-off pressure on Bitcoin (BTC).
Despite the impending sell-off, there are other key trends within the network that could help cushion the impact.
Bitcoin (BTC), the most prominent cryptocurrency globally, is facing increased scrutiny as Mt.Gox initiates the repayment process of $9.4 billion to its investors. Reports indicate that 137,890 BTC coins have been transferred from Mt.Gox wallets to creditors.
The movement of such a large quantity of BTC raises concerns about a possible sell-off that may lead to a decline in Bitcoin’s price. Mt.Gox was a major Bitcoin exchange until it was hacked in 2014, handling 70% of all Bitcoin transactions globally at that time. After the hack, it was reported that 840,000 BTC had been stolen.
Last year, the US Department of Justice (DOJ) identified two Russian nationals as the hackers responsible for the stolen BTC. Prior to the DOJ’s involvement, the Japanese government approved a rehabilitation plan in 2021 to enable creditors to recover some of their lost funds. The recent transfer of BTC coins is believed to be part of this distribution process.
Experts are divided on the potential impact of the influx of Bitcoin from Mt.Gox repayments. Some are concerned that it could flood the market and drive prices down, especially after a recent 4% decrease in Bitcoin’s value, indicating that some investors may have already started cashing out.
In the Bitcoin market, investors are typically categorized as Long-Term Holders (LTHs) or Short-Term Holders (STHs). LTHs are known for holding onto their BTC for more than 155 days, showing resilience to market volatility. On the other hand, STHs are those who have acquired Bitcoin within the past 155 days and may react quickly to market changes.
The actions of these different types of investors could influence the expected sell-offs from the Mt.Gox Bitcoin distribution.
Recently, there have been positive sentiments surrounding BTC. Crypto analyst James Van Straten highlights the market’s ability to absorb large sell-offs, citing instances where Grayscale Bitcoin Trust and LTHs sold around 1 million BTC in the last five months with minimal price disruptions. He suggests that Mt.Gox’s repayments may not cause a major crash as it represents only a fraction of this amount.
Data from Glassnode released earlier this year shows a decrease in the number of Bitcoin addresses holding coins for more than five years, indicating that some long-term investors have been taking profits. This suggests that not all creditors will rush to sell their recovered BTC, with some possibly holding onto it or even increasing their holdings based on their investment strategies, which could have a positive long-term impact.
As of the current moment, BTC is trading at $66,003, showing a 0.38% decrease over 24 hours. The market cap stands at $1.3 trillion, with a trading volume of $17.6 billion.
For more information on Bitcoin, you can explore resources such as a Buy Bitcoin Guide, Bitcoin Wallet Tutorial, and 24-hour Bitcoin Price Check. Stay updated with the latest Bitcoin news to understand more about this cryptocurrency.