What Could be The Maximum Impact of Mt. Gox Creditors Selling Their Bitcoins?

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As an experienced financial analyst, I believe that while the selling pressure from Mt. Gox creditors could put downward pressure on the Bitcoin price in the short term, the market may be able to absorb it without causing a significant long-term impact. Based on the analysis by Alex Kruger, the maximum drop in the Bitcoin price from the current levels could be around 10.5%, which would translate to a range of $47,000-$48,000. However, I also believe that this selling pressure is temporary and the market will recover once the distribution process is complete. Moreover, the strong demand for Bitcoin ETFs during the recent correction is a positive sign for the long-term health of the market. It’s important to note that past performance is not indicative of future results, and investors should always exercise caution when making investment decisions.

As a financial analyst, I’d rephrase it this way: Mt. Gox, the crypto exchange, has initiated the long-awaited repayment plan for its creditors, distributing payouts in both Bitcoin (BTC) and Bitcoin Cash (BCH). This $9 billion settlement has triggered apprehensions throughout the cryptocurrency market, causing a significant drop in Bitcoin’s price to reach around $53,500 on Monday. Furthermore, the recent German government Bitcoin sell-off has compounded these concerns.

As a crypto investor, I understand the concerns surrounding the recent Bitcoin sell-offs allegedly stemming from Mt. Gox creditors. Let’s explore the potential implications of these sales and assess their impact on the market.

Can the Market Absorb Mt. Gox Bitcoin Selling?

Expert here: If the creditors of Mt. Gox decide to sell their assigned Bitcoins, Alex Kruger, a well-known market analyst, has described the potential implications from a broader standpoint. In total, Mt. Gox holds approximately 141,000 BTC that needs to be distributed. Out of this amount, around 95,000 bitcoins are earmarked for creditors opting for early distribution, which will be disbursed over the next 90 days, accompanied by a reduction of 10%. According to Kruger’s analysis:

    20,000 BTC to credit funds.
    10,000 BTC to a New Zealand exchange currently in bankruptcy proceedings, meaning this portion won’t hit the market.
    65,000 BTC to individual creditors.

As a researcher, based on Kruger’s analysis, I can infer that approximately 30% of the 85,000 Bitcoins entering the market could potentially be put up for sale. This equates to around 25,000 BTC being available for transactions.

As a researcher looking into the matter, I ponder over the possibility that creditors could dispose of 30% of their Bitcoins in a single sale instead of spreading it out over time. Additionally, I entertain the thought that Germany might choose to liquidate its entire Bitcoin stash of 23,700 BTC at once.

According to Kruger’s calculation, the Bitcoin price may experience a maximal decrease of approximately 10.5% from its present value. Consequently, the lower bound of the potential price range would be around $47,000, while the upper limit could be close to $48,000.

Let’s run some numbers.

Gox needs to distribute a total of 141,000 units. Of this amount, 95,000 units will be distributed within the next 90 days, with those opting for early distribution receiving a 10% reduction in their share.

Of those 95K:

– 20K going to credit funds
– 10K going to a NZ exchange…

— Alex Krüger (@krugermacro) July 8, 2024

BTC Price Recovery

Bitcoin’s price took a dip to $53,500, but it has since rebounded, now sitting 3.4% higher at $57,330. This uptick indicates that the brief selling frenzy affecting Bitcoin has eased for the time being.

In contrast, there has been increasing interest in Bitcoin ETFs during the market downturn, with a steady flow of investments heading in their direction.

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2024-07-09 09:36