Analysts at digital asset management firm CoinShares believe that the fear surrounding the repayments of defunct crypto exchange Mt. Gox is exaggerated. Mt. Gox was once the world’s largest Bitcoin exchange before going bankrupt and losing most of its coins due to theft. However, the exchange has since recovered most of its coins and has been in a lengthy bankruptcy process to pay back its former customers. The uncertainty in the market stems from the potential sell pressure that could occur if Mt. Gox were to sell its BTC to redeem creditors.
In a recent report, CoinShares suggests that many of the Mt. Gox creditors are likely to hold on to most of their coins in order to minimize their tax burden. When selling does occur, the firm anticipates that it will be spread out over many crypto exchanges, allowing buy-side liquidity ample opportunity to absorb the sell pressure.
The report also highlights that creditors are likely to receive around 15% of the bitcoin they held at the time, and given the meteoric rise in Bitcoin’s value since then, they are up roughly 13,600%. This would result in an exorbitant tax event if they decide to sell immediately. Therefore, many creditors may choose to only sell a small portion of their holdings or hold onto their coins for the time being. The fact that creditors have faced numerous offers from claims buyers over the last 12 years further supports this idea.
The distributions will occur on a number of exchanges at different dates throughout the month, which will soften the likelihood of large concurrent selling. CoinShares emphasizes that the potential sell pressure is more of a concern than the actual selling itself.
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