The commencement of the Mt Gox Repayment process this week has caused significant fluctuations in the Bitcoin market. Despite the prevailing uncertainty, analysts still see Bitcoin as a long-term investment against weakening fiat currencies.
The long-awaited Mt Gox repayments, which began recently, have generated mixed opinions among cryptocurrency enthusiasts due to their significant impact on the price of BTC. While the initial fears of a massive sell-off among Bitcoin investors are diminishing, skepticism continues to pervade the crypto market.
It is worth reminiscing that the crypto exchange collapsed in 2014, resulting in a substantial loss of 150,000 BTC. Since then, the process of rehabilitation has been a challenging and protracted endeavor, filled with extensive discussions. Finally, the repayment process has commenced, although the timeframe varies.
According to a recent document from the trustee, Mt. Gox creditors can expect to receive their Bitcoin (BTC) or Bitcoin Cash (BCH) repayments within a range of 14 to 90 days, depending on their chosen crypto exchange. For instance, Kraken will take up to three months to process payouts, whereas Bitbank and SBI VC Trade will complete them within two weeks.
This extensive payout schedule for Bitcoin and Bitcoin Cash aims to mitigate the possibility of a significant price drop, which has been a concern for crypto investors fearing a large sell-off. However, the total amount being distributed, estimated to be around $2.71 billion worth of BTC, is substantial enough to create market volatility.
At the time of writing, BTC is currently trading at $56,874.25, marking a 7.72% decrease in price over the past week. Following the Mt Gox news, Bitcoin experienced a modest price decline, with its value hovering just below the $54,000 level. This prompted investors to liquidate assets worth more than $665 million across exchanges. This event mirrored the volatility witnessed during the FTX collapse.
However, the price has since rebounded above the crucial support level of $56,000, suggesting that the initial fear among investors has gradually subsided. Additionally, the fear and greed index, an important sentiment indicator, also reflected this anxiety, dropping from a neutral 44 to a fearful 29 within 24 hours.
Despite the immediate turbulence, some analysts remain optimistic about Bitcoin’s long-term price trajectory. As previously reported, Chris Wood, Chief Strategist at Jefferies Investment Bank, emphasized the potential benefits of Bitcoin in light of the weakening US dollar. Wood advised investors to view Bitcoin as a long-term hedge against the devaluation of traditional currencies, rather than a short-term speculative asset. This perspective aligns with the broader narrative of Bitcoin’s increasing adoption as a mainstream investment vehicle.
Wood further stated that the allocation to Bitcoin was introduced because it represents a legitimate alternative for risk-averse capital seeking a store of value, amidst the accumulating evidence over the past two decades of currency debasement in the G7 world.
In summary, the Mt Gox repayment plan has introduced uncertainty into the crypto market. While the initial fears of a sell-off are diminishing, the staggered payout schedule and ongoing volatility indicate continued risks for investors.