JPMorgan & CoinShares Predict Bitcoin Shake-Up From Mt. Gox $9B Payout

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As an experienced analyst in the cryptocurrency market, I believe the upcoming Mt. Gox payout to its creditors will have significant implications for Bitcoin’s price and market sentiment. The release of approximately 141,000 BTC, which represents about 0.7% of the total circulating supply, is a considerable stake that could potentially put downward pressure on the market.

Mt. Gox, the former largest Bitcoin exchange that went bankrupt in 2014, is now planning to distribute around $9 billion in Bitcoin to its affected users. Analysts from JPMorgan and CoinShares predict this event could have substantial consequences for the cryptocurrency market.

Mt. Gox Repayment Impact On Bitcoin

Approximately 0.7% of the existing 19.7 million Bitcoins in circulation is going to be paid out by Mt. Gox, which represents a substantial proportion. Consequently, James Butterfill, the Head of Research at CoinShares, has raised concerns about the potential market repercussions of this considerable Bitcoin disbursement. He emphasized that the prospect of releasing this Bitcoin hoard has long been a source of anxiety for Bitcoin optimists.

As a crypto investor, I recognize the significant impact news can have on the market, particularly when it comes to announcements related to trusts or funds selling their holdings. For instance, Butterfill’s announcement that the Trust would begin selling in July caused understandable concern among investors.

John Glover, the Chief Investment Officer (CIO) at Ledn, shared similar views. He anticipates a potential situation where numerous creditors may choose to sell their Bitcoins to secure profits. Glover stated, “Many will undoubtedly decide to cash out and relish in the fact that being stuck with their assets in the Mt. Gox bankruptcy turned out to be their most profitable investment yet.”

As an analyst, I’d like to add that Mt. Gox’s closure in 2014 marked a pivotal point for Bitcoin’s price trajectory. The value of a single Bitcoin was hovering around $600 at the time. Fast forward to today, and we’re looking at an astonishing increase to over $63,200 per coin. In fact, Bitcoin reached an all-time high of $73,800 in March 2024, which might be attributed to the launch of Spot BTC ETFs in January that year.

As an analyst, I’ve also considered the implications of Mt. Gox creditors liquidating their bitcoin holdings, which could negatively affect the cryptocurrency market in the near term. In a recent research note, my team and I at JPMorgan projected that most of these sell-offs may occur in July. Consequently, we anticipate downward price pressure for crypto assets during this month, followed by a potential recovery starting from August.

Gemini Effect To Continue With Mt. Gox Repayment

The upcoming Bitcoin sales on this platform mirror the trend seen with Gemini, a different crypto exchange. Not long ago, in June, Gemini returned approximately $2 billion in Bitcoin to its users. This event took place shortly after Gemini reinstated Bitcoin withdrawals from its Earn lending program, which had been halted for several months prior. The resumption of these withdrawals led to a notable rebound in the price of Bitcoin.

As an analyst at JPMorgan, I’ve observed that the recent influx of Bitcoins returning to Gemini exchange from the auction of seized coins led to a negative price reaction. This was likely due to retail investors taking profits and selling their Bitcoin holdings. Similar circumstances could arise with Mt. Gox creditors receiving their Bitcoin settlements, which might lead to additional supply entering the market and potentially causing further price declines.

JPMorgan analysts anticipated that certain creditors would opt to sell their Bitcoin positions in order to profit from the cryptocurrency’s significant price increases. Additionally, there has been a noticeable trend of selling among governments in Germany and the United States. Recently, the German government disposed of an additional 400 Bitcoin units to Coinbase, Kraken, and Bitstamp.

The German government has sold over 2,700 Bitcoins in the latest transaction, bringing their total disposal since June to this figure. Meanwhile, the US government offloaded an impressive 4,000 Bitcoins last month. These significant sell-offs have significantly influenced Bitcoin’s price due to market fear (FUD).

As an analyst, I’ve observed that the announcement of Mt. Gox repayments led to a significant decrease in Bitcoin price from around $62,000 to $59,000 in June. This implies that the actual payout could potentially cause the price to fall even further. Furthermore, there has been an increase in miner capitulation due to a substantial drop in hash rate prices. This trend suggests that miners may be selling off their Bitcoin holdings, which could add more downward pressure on the market.

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2024-07-01 15:39