Most of the Bitcoin being repaid by defunct exchange Mt. Gox will be market sold, threatening to cause more downside pressure for BTC.
According to finance analyst Jacob King, the Mt. Gox repayments could add $8.2 billion worth of additional selling pressure to Bitcoin’s (BTC) price.
The analysts said that on-chain movements already point to the fact that Mt. Gox’s creditors have started selling, King wrote in a July 4 X post:
“No Bitcoiner will say this out loud, but the majority of the $8.2 Billion in $BTC that is set to be distributed back to ex-clients are going to be sold off.”
The gloomy prediction comes hours after Mt. Gox began repaying its debts in Bitcoin and Bitcoin Cash (BCH), the collapsed crypto exchange announced on July 5.
Will Mt. Gox send Bitcoin back into bear market territory?
The predictions raise concerns about the price of Bitcoin, which has been struggling to gain traction for over a month and is currently trading above the $60,000 psychological mark.
Bitcoin has been in a downtrend for the entire month of June, logging a nearly 18% loss during the second quarter of 2024.
However, the market selling by Mt. Gox’s creditors could potentially take Bitcoin back into bear market territory, according to the analyst:
“I understand this is controversial, but based on the current low demand volume, this will easily send BTC back into a harsh bear market.”
Bitcoin price fell 3.9% in the 24 hours leading up to 10:17 am UTC on July 5 to trade at $55,250. The world’s first crypto is down over 10% on the weekly chart, according to CoinMarketCap data.
Despite the potential selling pressure, the repayments are a positive development for the industry and the defunct exchange's users. This sentiment is echoed by Mark Karpelès, the former CEO of Mt. Gox, who highlighted this in a July 5 X post:
Despite the potential selling pressure, the repayments come as a positive for the industry and the exchange’s defunct users, as also highlighted by Mark Karpelès, the former CEO of Mt. Gox. He wrote in a July 5 X post:
“Mt. Gox customers have finally started receiving Bitcoins! After over 10 years I wasn’t sure anymore if it’d finally happen, but here we are finally!! This has been a long journey and I’m happy to see we're finally getting there, only a bit more.”
Up to 99% of Mt. Gox creditors could be selling, according to the analyst
More than $9.4 billion worth of Bitcoin is owed to approximately 127,000 Mt. Gox creditors who have been waiting for over 10 years to recover their funds.
Considering that Bitcoin price increased by over 8,500% during the past 10 years, the majority of defunct creditors will likely look to lock in some profits.
This is partly why King also expects around 99% of the creditors to sell their BTC. He wrote:
“I’d say 99% of those on Mt. Gox are going to sell their coins the moment they get it. Imagine billions worth of Bitcoin all being dumped gradually over the next several weeks. There is no way to spin this to be bullish, or news that could offset this.”