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Why the allocation of $9 billion from Mt. Gox will not have much impact on the price of Bitcoin

Why the allocation of $9 billion from Mt. Gox will not have much impact on the price of Bitcoin

Cryptodnes2024/07/02 13:22
By:Cryptodnes

The head of research at crypto financial services company Galaxy has sought to play down fears that Mt.Gox's long-awaited payouts could trigger a crash in Bitcoin (BTC).

In a new interview, Alex Thorne stated that the now-defunct crypto exchange Mt.Gox should pay off to creditors about 142,000 BTC worth nearly $9 billion from July to October.

Last week the news for the upcoming payment of the Bitcoin due ( BTC ) tokens from Mt. Gox sent shockwaves through the crypto markets, resulting in the liquidation of over $313 million. However, according to Thorne, concerns about the situation with Mt. Gox may be overstated.

His analysis shows , that only a small fraction of the total number of allocated BTC is likely to be sold on the open market. He estimates that less than half of those 150,000 BTC will actually be available for sale. Thorne attributed this to the fact that some of the lenders accepted a 10% to 11% discount for early payout, bringing the total down to 94,600 coins.

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Thorne also explained that many creditors have previously sold their receivables to funds at a discount, estimating that these funds currently hold around 20,000 BTC.

Given that they are run by investors looking to hold long-term positions in Bitcoin, Thorne believes that this fact will reduce the total number of BTC available for sale to around 74,000 coins.

He also stated that the 10,000 BTC will be received by the crypto exchange Bitcoinica, which cannot sell it immediately due to the ongoing bankruptcy proceedings in New Zealand.

Overall, Thorne predicts that only about 64,000 BTC will actually be in the hands of traders, and suggests that most of those recipients are early Bitcoin investors who are more likely to hold onto their tokens rather than sell them. Finally, he concluded that the potential for significant market impact from paying off Mt. Gox will be smaller than expected.

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