Why Mt. Gox Repayments Won’t Hit Bitcoin as Hard as Predicted, Explained by CoinShares
Fear surrounding the repayments of the now-defunct crypto exchange Mt. Gox may be exaggerated, as per analysts at digital asset management firm CoinShares.
Mt. Gox, once the world’s largest Bitcoin exchange, faced a sudden bankruptcy, resulting in the loss of most of its coins due to theft.
The exchange managed to recover most of its coins and has since been undergoing a lengthy bankruptcy process to reimburse its former customers. This process has been a significant source of uncertainty in the market due to the potential sell pressure that could arise if Mt. Gox were to sell its BTC to repay creditors.
In a recent report by CoinShares, it is suggested that to minimize their tax liabilities, many Mt. Gox creditors are likely intending to retain most of their coins. When selling does happen, the firm anticipates that it will be distributed across various crypto exchanges, allowing buy-side liquidity enough time to absorb any sell pressure.
Considering that creditors are expected to receive approximately 15% of the Bitcoin they held at the time, and with Bitcoin’s substantial price increase since then, they are currently up by around 13,600%. This could lead to significant tax implications if they opt to sell immediately. Therefore, many creditors may choose to sell only a portion of their holdings or hold onto them for the time being.
Moreover, over the past 12 years, creditors have received multiple offers from claims buyers that would result in a USD payout. The fact that many creditors have not accepted these offers suggests that a USD payout may not be appealing to them. As a result, there is uncertainty about the exact number of coins that will enter the market post-distribution.
The distributions are expected to take place on several exchanges, including Bitstamp, Kraken, Bitbank, BitGo, SBI VC Trade, and others, spread out over different dates throughout the month. This staggered approach is likely to reduce the likelihood of significant simultaneous selling.
CoinShares emphasizes that the perceived potential sell pressure is more of a concern than the actual selling itself.
As of the latest update, Bitcoin is trading at $60,146.
