Bitcoin Price Plunges Amid Concerns Over Mt. Gox Sale, Analytics Firm Offers Reassurance
In the wake of fears surrounding the potential sale of Mt. Gox, the price of Bitcoin (BTC) has experienced a significant drop, causing a sharp decline in the cryptocurrency market. Mt. Gox, a dormant crypto exchange, had previously announced its intention to return over 140,000 BTC to its customers. These assets were originally stolen in a well-known hack back in 2014.
Now, the market is grappling with the potential impact of such a large number of BTC flooding the market in such a short period of time. To put it into perspective, this number is slightly less than the immediate liquidation of Fidelity’s spot Bitcoin ETF, which currently holds 167,375 BTC.
However, Alex Thorn, the director of research at Galaxy, believes that the market may be overreacting to this situation. Thorn suggests that “fewer coins will be distributed than people think, resulting in less BTC selling pressure than the market expects.”
Thorn’s research indicates that approximately 75% of creditors are expected to receive their payments “early” in July, which amounts to a distribution of around 95,000 coins. Out of these, Thorn estimates that 65,000 coins will go to individual creditors. He suggests that these creditors may be more resistant to selling than anticipated, considering the significant rise of Bitcoin since the crash and the potential impact of capital gains taxes. They have already withstood “compelling and aggressive offers from demand funds” for several years.
In terms of demand funds, Thorn argues that most partners in these funds are high-net-worth individuals seeking to increase their Bitcoin holdings at a discounted rate, rather than arbitrageurs looking for quick profits. This could further alleviate the selling pressure on the market.
Therefore, analysts believe that while the return of Mt. Gox BTC may initially appear to be a threat to the market, the actual impact may be less severe than feared.
*This article is for informational purposes only and should not be considered as investment advice.