The $8B Bitcoin Dump Scare from Mt. Gox is a Real Concern
CoinChapter.com
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NAIROBI (CoinChapter.com) — The defunct Japanese cryptocurrency exchange Mt. Gox has initiated a transfer of approximately 47,230 BTC, valued at $2.71 billion, to a new wallet address. This transaction, occurring at 12:30 am UTC on July 5, marks its first significant movement since May, as reported by blockchain analytics platform Arkham Intelligence. The Bitcoin was moved from cold storage.
In May, Mt. Gox transferred nearly $7.3 billion worth of Bitcoin to an undisclosed wallet, causing a 2% dip in Bitcoin’s price. Over the past week, Bitcoin has seen a 10.62% decrease, intensifying concerns about market stability.
This recent transfer aligns with Mt. Gox’s scheduled plan to begin repaying creditors in July, amounting to $8.5 billion in Bitcoin. Market participants are anxious that a massive sell-off could follow, potentially flooding the market with Bitcoin that has been inaccessible for over a decade.
Mt. Gox Initiates Repayments in Bitcoin and Bitcoin Cash
Mt. Gox has commenced repayment of its debts in Bitcoin and Bitcoin Cash through specified cryptocurrency exchanges. On July 5, it transferred 1,545 BTC to Bitbank. Trustee Nobuaki Kobayashi confirmed on June 24 that all necessary steps for repayments have been completed.
According to MtGoxBalanceBot on X, the total Bitcoin balance across all known addresses controlled by the Mt. Gox Trustee is currently 94,457 BTC. Since the repayment process began, 47,288 BTC have been moved from these addresses.
Creditors may not receive their Bitcoin immediately. A trustee document indicates that the timeline for payouts to appear in creditors’ accounts varies by exchange. Kraken has a 90-day processing period, while Bitstamp may take up to 60 days. BitGo will display payouts within 20 days, and both SBI VC Trade and Bitbank will complete payouts within 14 days.
Market Concerns and Analyst Perspectives
On July 5, Bitcoin’s value dropped below $54,000, but there are indications of recovery, with the cryptocurrency now exceeding the $56,000 mark.
Alex Thorn, head of research at Galaxy Digital, suggested that many Mt. Gox Bitcoin holders might maintain their holdings, despite opportunities to sell (“diamond hands”). He also highlighted the potential negative impact of capital gains taxes on large Bitcoin sales.
Karan Singh Arora, an independent crypto analyst, expressed concerns about the market impact. He noted that Mt. Gox’s recent transfer of 48,000 BTC led to a drop in Bitcoin’s price to $53,000. Arora warned that with over $8 billion in BTC yet to be sold, Bitcoin prices could face a substantial decline. Victims of the hack have waited over a decade for their funds, which have appreciated by over 10,000%.
Arora added that a repayment of less than 10% has already caused a significant drop, and the remaining tokens could potentially drive Bitcoin’s price down to $20,000.
Mt. Gox is not an isolated incident. Recently, Gemini, a cryptocurrency exchange, returned over $2 billion worth of Bitcoin to users, resulting in a 230% recovery in value since suspending withdrawals in November.
Despite these dire warnings, Arora assured that Bitcoin has sufficient liquidity to absorb gradual sales over several months, if not all released at once.
