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Mt. Gox Redemption Fears ‘Overblown’ Say Traders as $10B BTC Holdings Draw Concerns
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Traders believe the selling pressure from Mt. Gox’s repayments might be less severe than anticipated, potentially easing concerns about an immediate selloff.
Galaxy Research suggests that a significant portion of the distributed Bitcoin may not be immediately sold, as most will likely be held by creditors due to their low-cost basis.
Crypto traders say selling pressure from Mt. Gox’s newly announced repayments could be much less than market observers fear, easing concerns about an imminent selloff.
“The impact on bitcoin’s price from Mt. Gox distributing Bitcoin is likely overblown,” Sam Callahan, senior analyst at Swan Bitcoin, said in a Tuesday email to CoinDesk. “Creditors who wanted to sell their bitcoin have now had more than 10 years to do so through selling their bankruptcy claims to more convicted, long-term investors.
“In addition, most creditors will likely hold their bitcoin because their cost basis is less than $700 per bitcoin,” he added.
Galaxy Research said in a Monday note that of the total 141,000 BTC earmarked for distribution, 65,000 BTC will be delivered to individual creditors, and another 30,000 BTC will be delivered to claims funds and a separate bankruptcy.
“It’s reasonable to assume that most of the BTC received by funds that acquired claims from creditors will be distributed to LPs in kind and not sold off,” the firm said, alleviating concerns.
The defunct crypto exchange’s trustees said they are preparing to distribute the bitcoin (BTC) stolen from clients in a 2014 hack in the first week of July.
The exact bitcoin amount to be distributed remains unknown publicly, but the exchange consolidated 140,000 BTC, worth around $9 billion, from multiple cold wallets to a single address in May.
Expectations of the upcoming selling pressure sent bitcoin spiraling down more than 4% on Monday, briefly driving it below $60,000 for the first time since early May.
