Mt Gox is ready to release funds from creditors who have been locked for 7 years. Therefore, it is possible that 137,000 BTC will be released soon. So how does this affect the Bitcoin price? Will it cause more falls?
Mt. Gox is preparing to pay 137 thousand BTC
As you know from the news of Kriptokoin.com, Mt. Serious funding was lost in the Gox hack. At today’s price, there was a loss of 850,000 BTC worth about $17.8 billion. However, now, 137,000 BTC worth around $2.8 billion is ready to return to the market soon. In 2014, Mt. Gox reported that he found 200,000 BTC. But those coins have been locked in the case until now.
In November 2021, Mt. Gox has released an official “Rehabilitation Plan” to return lost funds to investors who lost access to their crypto 7 years ago. Then, on July 6, 2022, Mt. Gox and “Rehabilitation Trustees” Nobauaki Kobayashi sent an email giving creditors the option to receive USD, BTC or BCH. Finally, creditors are closer to the funds released than ever before.
Mt. Do Gox coins affect Bitcoin price?
Miles Deutscher, a crypto analyst and Crypto Banter host, shared his views on Twitter. Deutscher notes that many investors said the release of 137,000 BTC would create a selling pressure. Therefore, he is concerned that it could cause a devastating drop in Bitcoin price.
Some even say that a drop in Bitcoin price could align with Ethereum ‘Merge’. From this, he theorizes that this could lead to the “Return” to happen. Flippening is a hypothetical event where Ethereum surpasses Bitcoin in market cap. For that to happen, Bitcoin just needs to drop to $10,000 and Ethereum has to rise 30% from its current price.
However, it’s possible that the fears are unfounded, as many creditors have sold their rights to crypto funds. Groups like Fortress Investment Group LLC have offered creditors between $600 and $1,300 in cash in advance. Michael Hourigan, managing director of Fortress, said: “Instead of waiting another 1 to 1.5 years, we now offer a liquidity option to creditors who want to receive cash or BTC.”
Also, creditors who have not yet settled early represent early crypto believers. Therefore, it is possible that they are reluctant to liquidate their Bitcoins. Currently, Bitcoin is down more than 60% from its all-time high. So it makes sense to suggest that many of those who receive Bitcoin payments will be more likely to send it to cold storage than to sell it.
On the other hand, it is possible that some of the released funds will find their way into altcoins such as Ethereum. Before 2014, there was little or no alternative to Bitcoin. Whereas, it is possible that tens of thousands of crypto projects will see an influx of investment in 2022.
What happens if Bitcoin is liquidated?
A portion of Bitcoin was sold before the imminent launch of BTC. In 2018, Kobayashi 24,658 put forward the following justification for the sale at a creditors meeting. “It was necessary and appropriate to secure the appropriate amount of money to secure the principal interests of the creditors and delay the damages of the identified and undetected bankruptcy claims.”
As the chart below shows, the liquidation marked the top of the 2017 bull run. Bitcoin price slumped after the decline in the number of Bitcoins held by Mt Gox. It led to a 2018 bear market that did not recover until late 2020.
According to experts, if the release of the remaining Mt Gox funds has a similar effect on the Bitcoin price, it will likely fall below $10,000. However, even in recent months, there has been equal selling pressure on Bitcoin from parties like the Luna Foundation Guard, Three Arrows Capital, and Bitcoin miners.
LFG has sold several billion dollars worth of BTC, which has less of an impact on Bitcoin as the market absorbs selling pressure. The weeks after the event caused the price of Bitcoin to plummet due to a change in market belief and the overall global outlook. Experts say the markets, Mt. Gox says it’s likely to absorb any sales from its creditors. But the social sentiment of early Bitcoiners giving up their crypto could create a downside psychological sentiment.
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