Mt. Gox, a beleaguered crypto exchange, is set to initiate repayments to some creditors soon, according to sources on Reddit. While the exchange has postponed repayments to October 2024, there are indications that creditors who have already provided the necessary details may start receiving Bitcoin (BTC) repayments in the next two months.
Mt. GOX ready to add on selling pressure?
Creditors have reportedly received emails from the Mt. Gox Rehabilitation Trustee confirming the ownership of their accounts and completing identity verification through the crypto exchange or custodian specified as the payment address for BTC/BCH. This news has stirred discussions within the crypto community, with warnings about a potential impact on the market.
Mindao Yang, the founder of decentralized stablecoin protocol dForce Network, expressed concerns in a post, highlighting that Mt. Gox creditors are expected to unlock substantial amounts of BTC, adding to the existing 200,000 BTC. This move comes in when the market is repricing of Grayscale Bitcoin Trust (GBTC) following the approval of a spot Bitcoin ETF.
Yang stated, “Bitcoin halving will reduce the annual supply by 160,000 coins. Interesting supply dynamics will emerge in the coming months.”
To receive repayments in BTC/BCH, creditors must ensure their accounts are active. Those with disabled or frozen accounts may face difficulties in receiving the repayment in the future.
Previously, in December 2023, creditors reported receiving compensation in Japanese yen in their PayPal accounts, and repayments have been ongoing, with some also receiving payments in US dollars.
As per TokenUnlocks data, Mt. Gox still holds over 137,800 BTC, valued at $5.5 billion, out of a total of 162,105 BTC worth $6.5 billion.
What are the potential market impacts and expert opinions?
The looming question is whether the influx of BTC from Mt. Gox will lead to a selloff and negatively impact the overall BTC price. Experts hold different views on this matter, with some anticipating a gradual release of repayments over several months throughout the year.
Contrarily, others speculate the possibility of a lump sum repayment, raising concerns about a potential selloff pressure in the market. Yang acknowledges the situation, stating, “Of course, the selling pressure should be relatively limited. After all, many debts have been sold over the years, and the prices have been reflected in the market.”
Despite these concerns, it is essential to note that the market is dynamic, and influenced by various factors beyond Mt. Gox repayments. In the past 24 hours, BTC has experienced a 3% decline, currently trading at $39,834, with the 24 hour low and high ranging between $39,450 and $41,242 respectively.
The market participants will closely monitor the impact of Mt. Gox’s Bitcoin repayment on the overall market dynamics. It is yet to be seen if the expected release of a lot of Bitcoin will make more people sell, possibly causing the market to become more unstable.
