The old bankrupt Japanese exchange Mt. Gox notified creditors on 6/24 that it will begin distributing Bitcoin (BTC) and BCH in July, causing market panic and selling pressure. Bitcoin fell below the US$60,000 mark yesterday. However, Galaxy Research Director Alex Thorn believes that the selling pressure on Bitcoin is smaller than everyone expected, so please don’t worry too much.
creditors have been stuck in mt gox bankruptcy for 10+ yrs–finally trustee says in-kind distribution of #BTC #BCH will begin in july. we think fewer coins will be distributed than people think & that it will cause less #bitcoin sell pressure than market expects
— Alex Thorn (@intangiblecoins) June 24, 2024
here's why 👇
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ToggleMt. Gox Bitcoin Creditor Analysis
According to Galaxy analysis on May 13. Mt. Gox lost approximately 940,000 Bitcoins, and eventually recovered 15% of them, totaling 141,868 Bitcoins. However, due to the increase in the price of Bitcoin ($451 at the time of bankruptcy, and the assessed price on 5/13 was $63,500), the creditors' benefits increased 140 times in U.S. dollars.
If creditors choose to pay compensation in advance, they will only receive 90% of the Bitcoins (10% haircut). Galaxy expects that 75% of creditors will choose this option, which means that about 95K Bitcoins will be paid to creditors in advance.
Among them, 20k Bitcoin belongs to the claim fund, 10k belongs to Bitcoinica BK, and the remaining 65k belongs to independent creditors.
Independent creditors favor long-term Bitcoin holders
Thorn estimates that of the independent claims of about 65K Bitcoins, only 10% choose to sell immediately, which means the selling pressure is only 6,500 Bitcoins. The reasons are as follows:
- These independent creditors are technology-savvy early adopters of Bitcoin, so they will prefer to hold Bitcoin for the long term.
- They have resisted claims fund proposals for years, arguing on their behalf that it is Bitcoin, not dollars, that they want to recover
- Bitcoin has increased by 140% in US dollars, and if you sell it immediately, you will pay a high capital gains tax
Thorn has also spoken to people in claims funds, and he believes that the vast majority of these funds are high-net-worth traders looking for Bitcoin at a discount, rather than credit funds doing arbitrage trades. So they shouldn’t be in a rush to sell Bitcoin right away.
The selling pressure will be smaller than market expectations, and the flow of Arkham data can be observed
Thorn said all bitcoins will be distributed to creditors' exchange accounts at Kraken, Bitstamp or BitGo. Once Bitcoin is transferred to these platforms, it can be expected to take 24 to 72 hours for it to be credited to user accounts. Investors can look at Arkham 's analytical data to observe the flow of Mt. Gox Bitcoin.
