Mt Gox Starting 94 Billion Repayment Puts Pressure on Bitcoin Price

Mt.Gox is currently working towards repaying its creditors approximately $9.4 billion, which is putting pressure on Bitcoin (BTC) prices.
Despite the imminent selloff, there are other factors at play that could help mitigate the impact on the market.
Bitcoin, the most popular cryptocurrency globally, is under intense scrutiny as Mt.Gox begins the process of repaying investors a substantial amount of $9.4 billion. Reports indicate that 137,890 BTC coins have been transferred from Mt.Gox’s wallets to the creditors.
Concerns Rise Over Mt.Gox Bitcoin Repayment Plan
The transfer of such a large number of BTC coins has raised concerns about a potential market selloff that could result in a decrease in Bitcoin prices. Mt.Gox was one of the biggest Bitcoin exchanges until it was hacked in 2014. It was reported that 840,000 BTC was stolen during the hack, and Crypto News Flash revealed that the exchange handled 70% of all Bitcoin transactions globally at the time.
Last year, the US Department of Justice (DOJ) identified two Russian hackers responsible for the stolen BTC. Before the DOJ’s involvement, the Japanese government approved a rehabilitation plan in 2021 to help creditors recover some of their lost funds. The recent movement of BTC coins is believed to be part of this repayment process.
Experts are divided on the potential impact of the influx of Bitcoin from Mt.Gox repayments. Some are concerned that it could flood the market and lead to a price drop. This concern is exacerbated by Bitcoin’s recent 4% price decline, indicating that some investors may already be selling off their holdings.
The Bitcoin market can be categorized into Long-Term Holders (LTHs) and Short-Term Holders (STHs). LTHs are investors who have held their BTC for over 155 days and are generally more resilient to market fluctuations. On the other hand, STHs are investors who have purchased Bitcoin within the past 155 days and may be quicker to sell in response to negative market sentiment.
The actions of these investors could influence the expected selloff resulting from the Mt.Gox Bitcoin distribution.
Positive Sentiments Emerge for BTC
Crypto analyst James Van Straten highlights the recent strength of the Bitcoin market in absorbing large selloffs. He mentions a case where Grayscale Bitcoin Trust and LTHs sold approximately 1 million BTC in the last five months with minimal price disruption. He points out that Mt.Gox’s repayments represent only a fraction of this amount, suggesting that the market may be able to handle it without a significant crash.
Additionally, data from research firm Glassnode released earlier this year indicates a decrease in the number of Bitcoin addresses holding coins for more than five years, suggesting that some long-term investors are taking profits. As a result, not all creditors may rush to sell their recovered BTC.
Some creditors may opt to hold onto their BTC or even increase their holdings based on their investment strategies. Some argue that the long-term impact could even be positive.
At the time of writing, BTC is trading at $66,003, showing a 0.38% decline in the last 24 hours. The market cap stands at $1.3 trillion, with a trading volume of $17.6 billion.
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