Anticipated Extensive Bitcoin Liquidation as Mt Gox Initiates 9 Billion Payout Today
Key Points
– This week, Mt. Gox will begin distributing $9 billion worth of Bitcoin to its creditors, marking a significant step in compensating those who suffered losses a decade ago.
– JPMorgan analysts predict that some creditors may sell their Bitcoin, which could initially put pressure on the crypto markets this month.
– However, analysts expect a market recovery in August, thanks to the upcoming cash repayments from FTX, another bankrupt crypto exchange, estimated to be between $14 billion and $16 billion.
– Bitcoin recently experienced a 4% increase, reaching a trading price of around $63,350, but overall sentiment towards Bitcoin and the broader crypto markets remains cautious.
– Investors are concerned about a potential major liquidation event as Mt. Gox begins distributing the stolen tokens this week.
Mt. Gox Initiates $9 Billion Bitcoin Repayment
Mt. Gox, a once-prominent crypto exchange that faced bankruptcy ten years ago following a significant hack, is commencing the distribution of Bitcoin repayments to its creditors this week. After years of waiting, creditors are finally set to receive approximately $9 billion worth of Bitcoin, based on current prices.
Back in 2011, Mt. Gox lost approximately 950,000 bitcoins in a hack, a substantial amount considering that Bitcoin’s all-time high value at that time was $32 per BTC. Fortunately, around 140,000 of these bitcoins were later recovered, and their value has now surged to approximately $9 billion.
Between July and October, Mt. Gox creditors will receive a total of 142,000 bitcoins, which, at current prices, amount to about $9 billion. Although the deadline for repayments is set for October, JPMorgan analysts anticipate that most of the repayments will occur in July.
Anticipating a Major Sell-Off
JPMorgan analysts suggest that some creditors of Mt. Gox may choose to sell a portion of their Bitcoin receivables this month, potentially exerting initial pressure on the crypto markets. This expectation is reinforced by a slight decrease in JPMorgan’s Bitcoin futures position indicator, which is based on CME futures and indicates that primarily retail customers, rather than institutional investors, have been divesting their crypto holdings recently.
Nevertheless, analysts remain optimistic about a market recovery, particularly starting in August. This optimism is partly attributed to the upcoming cash repayments from FTX, another bankrupt crypto exchange. These repayments, estimated to be between $14 billion and $16 billion, are expected to occur shortly after the final approval of FTX’s wind-down plan on October 7.
FTX Repayments to Bolster Crypto Markets
FTX, like Mt. Gox, will also be compensating its creditors in the coming months. However, FTX’s repayments will be made in cash. The sizable amount, ranging from $14 billion to $16 billion, has the potential to support the crypto markets, as creditors with a background in cryptocurrencies may reinvest their repayments into digital assets.