Will the release of $ 3B Bitcoin from Mt Gox lead to a market bottom in August?
137,000 BTC worth about $ 2.8 billion will soon be released into the market as funds lost to Mt. The Gox hack in 2011 and subsequent losses of 850,000 BTC worth around $ 17.8 billion at today’s price. In 2014, Mt. Gox that they had found 200,000 BTC, but these coins have been locked in lawsuits until now.
In November 2021, Mt. Gox issued a formal “rehabilitation plan” to return lost funds to investors who lost access to the cryptographer about 7 years ago. Then, on July 6, 2022, Mt. Gox and “Rehabilitation Trustee” Nobauaki Kobayashi sent an email to creditors giving them the option to receive USD, BTC or BCH. The news brings us closer than ever to funds that are finally released to creditors.
Will Mt. Do Gox Coins Affect Bitcoins Price?
As a cryptanalyst and Crypto Banter host, Miles Deutscher, pointed out, many investors are concerned that the release of 137,000 BTC could cause a devastating drop in the price of Bitcoin due to increased selling pressure.
24 / Creditors have the opportunity to receive USD, $ BTC or $ BCH. It is estimated that creditors will start receiving funds as early as August.
Many people panic that the release of these funds will lead to a huge supply dump, which could affect $ BTC price.
– Miles Deutscher (@milesdeutscher) July 9, 2022
Some have even theorized that a decline in Bitcoin’s price may coincide with the Ethereum merger, leading to “The Flipping” being realized. The Flippening is a hypothetical event where Ethereum takes over Bitcoin in market value, and it could happen if Bitcoin fell to $ 10,000, with Ethereum rising by 30% from today’s price.
The Ethereum merger is perfectly timed with Mt. Gox users dumping ~ 140k BTC (~ $ 3 billion) at the end of August 2022.
The flipping is over us frens.
– EthereumJesus.eth⟠🙌🏻🦇🔊🐼 (@EthereumJesus) July 7, 2022
However, the fear may be unfounded as many creditors have already sold their claims to crypto funds. Groups like Fortress Investment Group LLC offered creditors an early payout of between $ 600 and $ 1300 in cash. Michael Hourigan, CEO of Fortress, was quoted as saying;
“Instead of waiting another 1 to 1.5 years, we offer a liquidity option for creditors who want to receive cash or BTC now.”
Furthermore, creditors who have not already made an early settlement may be reluctant to liquidate their Bitcoin as they represent early cryptocurrencies immediately. It is reasonable to suggest that many of those who receive a Bitcoin payment will be more likely to send it to cold storage than to sell it when Bitcoin is down over 60% from the all-time high.
It is possible that some of the released funds may find their way to all-coins such as Ethereum, which has its most significant moment in history on the horizon. Before 2014, there were few or no alternatives to Bitcoin, while in 2022, tens of thousands of crypto projects could see an influx of investments.
What if Bitcoin is liquidated?
Some of Bitcoin has already been sold before the upcoming release of Bitcoin. In 2018, 24,658 BTC (worth $ 260 million at the time) were sold by Kobayashi during a creditors’ meeting. The sale
«Was necessary and appropriate to obtain an appropriate amount
of money to secure the interests of the creditors of the principal and compensation for late payment of the established and indefinite bankruptcy claims. “
The liquidation marked the peak of the bull run in 2017, seen from the chart below. The price of Bitcoin fell after the decline in the number of Bitcoins held by Mt Gox, which led to the bear market in 2018 which it did not recover from until late in 2020.
Should the release of the remaining Mt Gox funds have a similar effect on the price of Bitcoin, it will probably fall below $ 10,000. But even in recent months, there has been as much selling pressure on Bitcoin from parties as Luna Foundation Guard, Three Arrows Capital and Bitcoin miners.
LFG sold Bitcoin for several billion dollars, which had an insignificant effect on Bitcoin when the market absorbed the sales pressure. The following weeks since the event resulted in Bitcoin’s price decline due to a change in market beliefs and general global outlook. The markets may well absorb all sales from Mt. Gox creditors, however, the social sentiment of early bitcoiners who give away their coins can create a bearish psychological sentiment.
