Galaxy’s research chief is addressing concerns that the upcoming Mt.Gox repayments might precipitate a Bitcoin (BTC) crash. On the Unchained Podcast YouTube channel, Alex Thorn discussed the defunct Mt.Gox exchange’s plan to start repaying creditors around 142,000 BTC, valued at nearly $9 billion, from July to October.
The announcement of Mt. Gox’s forthcoming BTC payments caused a stir in the cryptocurrency markets last week, resulting in over $313 million in liquidations. However, Thorn suggests that the anxiety linked to the Mt. Gox issue is probably exaggerated. His analysis shows that likely less than half of the coins will be sold on the market once distributed. He also believes that the beneficiaries are inclined to retain their BTC rather than sell immediately.
Thorn points out that those poised to receive their BTC soon have consented to a 10% to 11% reduction to benefit from Mt. Gox’s early payout option. He estimates that 75% of the creditors agreed to this arrangement, reducing the BTC to be delivered to 94,600.
Thorn also remarks that many individuals had previously sold their bankruptcy claims to funds at a reduced rate. He notes that these funds were actively purchasing claims from Mt. Gox users unwilling to wait years to recover any funds.
“We believe about 20,000 of the Bitcoin is held by these funds. Setting that aside, we’re left with 74,000 coins,” says Thorn.
He observes that the funds that acquired the bankruptcy claims are not expected to be major sellers since the liquidity providers who facilitated the claim purchases plan to retain the coins post-release.
Thorn’s discussions reveal that these liquidity providers and the funds’ investor bases consist largely of affluent Bitcoin enthusiasts seeking Bitcoin at a bargain. He is confident that these are steadfast investors aiming to accumulate Bitcoin at a discount.
Thorn further mentions that Bitcoinica, a cryptocurrency exchange, is the final group scheduled to receive BTC from Mt. Gox. The exchange is set to receive 10,000 BTC but cannot immediately sell its Bitcoin holdings due to its ongoing bankruptcy proceedings in New Zealand.
In total, Thorn estimates that 64,000 BTC will be allocated to the creditors’ trading accounts. He believes that these recipients, being early Bitcoin adopters, are more likely to keep their Bitcoin rather than sell upon receipt.
Overall, Thorn’s stance is that there won’t be significant selling pressure. “In essence, I anticipate far less selling than what a superficial glance at the headline might indicate.”
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