Bitcoin is now set for a ‘Black Swan’ shock as Mt. Gox Prepares To Refund 142K BTC ⋆ ZyCrypto

After successfully shaking off a brutal H1 and ending up above $20,000, Bitcoin is now facing another test. According to the letter sent to Mt. Gox creditors last week, the rehabilitation trustee hinted at starting the repayment of around 142K BTC as early as next month, raising fears of a brutal sell-off.

“The rehabilitation trustee is currently preparing to make repayments in accordance with the approved rehabilitation plan which the confirmation order of the Tokyo District Court was made final and binding on November 16, 2021,” read the letter.

Creditors must register online and select their preferred compensation method, including whether they wish to be compensated in USD, BTC or BCH. Mr. Nobuaki Kobayashi, the court-appointed rehabilitation trustee also set some rules, including the decision to set up a restriction reference period “from about the end of August this year until all or part of the repayments made as first repayments are completed. to ensure safe and secure repayments.

Following the latest correspondence, repayments may begin at the end of August to enable full compensation before the end of the year. While this is a deadline for Mt. Gox creditors, some crypto investors are now worried that this could trigger a bloody selloff of BTC that worsens the already bleak situation.

Mt. Gox rehabilitation plan was approved in 2018 before being confirmed in October 2021. Of the 850k BTC lost in the 2014 hack, the exchange stated that it had recovered 200k BTC. However, some BTC, including a 24,658 BTC stash in 2018, were sold, bringing the balance to about 142,000 BTC ($3.3 billion).

As shown in the chart below, after the 2018 selloff, BTC fell by over 70% before plunging into a consolidation that entered late 2020. Should this scenario repeat itself, BTC could fall below $10,000 or worse.

However, most people believe that Mt. Gox FUD may not have a lasting effect on BTC’s price.

“Many creditors who were waiting are long-term and do not want to sell. Gox coins are not as big as most people think. I don’t think they will flood/destroy the market.” said Miles Deutscher, a crypto investor. According to data from Glassnode, Gox coins represent just 0.72% of Bitcoin’s total supply and 1.03% of long-term holder supply, furthering the idea that a selloff is unlikely to last.

Moreover, Bitcoin has managed to weather the selloff caused by DeFi and Bitcoin miners, reducing the possibility of a lasting shock after Mt. Gox sale. For others, the rumored dump presents an opportunity for Ethereum to turn around as the merger approaches.

At the time of writing, Bitcoin is trading at $23,316 after suffering a 1.6% drawdown in the last hour.