Trustees Prepare for July Bitcoin Distribution
The trustees of the defunct crypto exchange Mt. Gox announced on Monday their plans to start distributing the bitcoin (BTC) stolen in a 2014 hack in the first week of July. This news has sparked concerns about potential market impact, but traders believe the selling pressure might be less severe than anticipated.
Eased Concerns Among Traders
Crypto traders suggest that the impact of Mt. Gox’s repayments on the bitcoin market could be much less dramatic than feared, reducing worries about an immediate sell-off. According to Sam Callahan, senior analyst at Swan Bitcoin, the selling pressure from Mt. Gox’s distribution is likely overblown.
“The impact on bitcoin’s price from Mt. Gox distributing Bitcoin is likely overblown,” said Callahan. He explained that creditors who wanted to sell their bitcoin have had over a decade to do so by selling their bankruptcy claims to more convicted, long-term investors. Additionally, he noted that most creditors are likely to hold onto their bitcoin due to their cost basis being less than $700 per BTC.
Insights from Galaxy Research
A report from Galaxy Research further supports this perspective, suggesting that a significant portion of the distributed Bitcoin may not be immediately sold. The firm noted that out of the total 141,000 BTC earmarked for distribution, 65,000 BTC will go to individual creditors, and another 30,000 BTC will be allocated to claims funds and a separate bankruptcy entity.
“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 stated, alleviating concerns about a large-scale sell-off.
Consolidation of Bitcoin Holdings
The Mt. Gox trustees have confirmed that they are preparing to distribute the bitcoin in the first week of July. The exact amount to be distributed has not been publicly disclosed, but in May, the exchange consolidated 140,000 BTC, worth around $9 billion, from multiple cold wallets into a single address.
Market Reactions
Despite these reassurances, expectations of upcoming selling pressure caused bitcoin prices to drop over 4% on Monday, briefly falling below $60,000 for the first time since early May. However, traders and analysts remain optimistic that the distribution will not lead to significant market disruption.
Conclusion
While the planned distribution of bitcoin by Mt. Gox trustees has raised concerns, traders and analysts believe the fears of a massive sell-off are overblown. With many creditors likely to hold their BTC and funds distributing to LPs in kind, the market impact is expected to be minimal.
