CoinShares has issued a detailed report aimed at refuting claims that the forthcoming Mt. Gox repayment in July will have an impact on the price of Bitcoin. However, the report indicates that Bitcoin Cash may face challenges for two specific reasons.
The widely known Japanese cryptocurrency exchange, Mt. Gox, is set to compensate creditors following a devastating hack in 2011 and subsequent bankruptcy. Despite this, industry insiders are expressing concerns about its potential impact on the price of Bitcoin.
CoinShares, a digital asset management firm, has released an extensive report analyzing the potential effects on the already declining overall market values.
The Current Situation
The report reveals that Nobuaki Kobayashi, acting as trustee for Mt. Gox, holds approximately 142,000 Bitcoins (BTC) and an equivalent amount in Bitcoin Cash (BCH). At the time of Mt. Gox’s closure, these assets were valued at $75 million; however, today they are worth $8.85 billion and $55.25 million respectively.
Upon announcing repayment terms to creditors earlier this month (July), they were given two options: full cash reimbursement or full payment in kind—receiving back Bitcoins instead of cash plus additional cash where applicable.
Most creditors received their remaining assets in either Bitcoin or Bitcoin Cash from Koabayashi’s distribution process and some have already received or will receive portions as cash.
As previously reported by Crypto News Flash,
the distribution was scheduled to commence this month but concerns over its effect on Bitcoin price led sellers to exit their positions or liquidate assets—a situation evident in recent broad market downturns with BTC dropping by
15%
over 30 days to trade at $58k.
Bitcoin Market Resilient; Not So for Bitcoin Cash
The CoinShares report suggests that data indicates less severe implications from the anticipated release of Mt. Gox funds than initially thought because only 75% of creditors opted for early partial payments amounting to around 90% owed.
Additionally,
the remainder agreed to await civil litigation resolution—a process likely prolonged—leading supply available now reduced from initial projections.
It’s also known that 20% of claims belong to entities such as Bitcoinica and MtGox Investment Funds (“MGIF”) which both consented to a 10% discount on their claims—specifically Botanica is owed
10,
000 BTC while MGIF is owed
20,
000 BTC.
MGIF publicly declared it would not sell its BTC holdings further reducing supply available—down from initial forecasts now standing at
75,
000 BTC after considering Botanica’s exemption apart from other individuals holding
65,
000 BTC debtors
Interestingly diversifying exchanges receiving repayments during different periods throughout July decreases chances of concentrated selling pressure—an approach deviating significantly so far from large-scale simultaneous liquidation strategies seen during peak periods such as spot-Bitcoin Exchange-Traded Funds (ETFs) launch day when recorded daily inflows approached nearly
150
,
000 Bitcoins
Accordingly Coninshares highlights several instances where large inflows did not significantly affect market fluidity implying if all these coins were sold simultaneously it could be managed effectively confirming similar observations made with Grayscale ETF liquidations during current year
Coninshares believes smaller liquidity alongside diminished investor interest makes plausible scenario where value erosion negatively impacts bitcoin-cash unlike larger scale more robust bitcoin itself
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