Traders believe concerns about Mt. Gox's $10B BTC repayment triggering a massive selloff are overblown, with many creditors likely to hold onto their coins.
The defunct crypto exchange Mt. Gox, which suffered a notorious hack in 2014, is set to distribute $10 billion worth of Bitcoin to creditors in early July. While initial fears pointed to a potential selloff impacting the market, traders and analysts suggest these concerns may be exaggerated. Let's delve into why the anticipated selling pressure might not be as severe as many fear.
Key Points
Selling Pressure Overblown: Traders believe the impact of Mt. Gox's Bitcoin distribution on market prices is likely overstated, as many creditors are long-term holders.
Creditors' Low-Cost Basis: Most creditors' cost basis is less than $700 per Bitcoin, encouraging them to hold rather than sell immediately.
Long-Term Investors: Creditors who intend to sell have had over a decade to do so, often by selling their bankruptcy claims to committed investors.
Galaxy Research Insights: Of the 141,000 BTC earmarked for distribution, a significant portion will go to claims funds and be distributed in kind, not sold off.
Historical Consolidation: Mt. Gox consolidated 140,000 BTC, valued at $9 billion, into a single address, triggering fears but with unclear immediate implications.
Price Reaction: Initial expectations of selling pressure caused Bitcoin to drop over 4%, briefly falling below $60,000.
The anticipated distribution of Bitcoin by Mt. Gox has caused market jitters, but experts believe the fears are overblown. Many creditors are likely to hold their Bitcoin due to their low acquisition cost, and much of the distributed BTC will not be immediately sold. As a result, the market impact may be less dramatic than initially feared. Investors should stay informed and avoid panic, considering the broader market context.
Source: Coindesk
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