Bitcoin Price Nears $60K Amid Mt. Gox Update, Potential Sales Impact Lower Than Expected

Bitcoin (BTC) prices took a sharp downturn on Monday as the trustee overseeing the defunct Mt. Gox crypto exchange announced plans to return over 140,000 BTC to clients impacted by a hack in 2014.

Currently, bitcoin is trading at $60,700, marking a more than 5% drop in the last 24 hours and reaching its lowest point since May. Ether (ETH) also experienced a similar decline, along with the broader CoinDesk 20 Index.

The news of the impending return of a significant amount of bitcoin has led to concerns among sellers. The influx of over 140,000 bitcoins back into the market within a month is a substantial event. To put it in context, this amount is slightly less than the total bitcoin holdings of Fidelity’s spot bitcoin ETF, which holds 167,375 bitcoins.

Alex Thorn, the head of research at Galaxy, provided insights into the potential impact of this return. Thorn believes that the distribution of coins may not lead to as much selling pressure as anticipated. He suggests that fewer coins will be distributed than expected, which could mitigate the selling pressure on bitcoin.

Thorn’s research indicates that approximately 75% of creditors are likely to opt for the early payout scheduled for July, translating to a distribution of around 95,000 coins. Within this distribution, Thorn predicts that 65,000 coins will go to individual creditors. Contrary to market expectations, Thorn believes these creditors may hold onto their bitcoins, citing their resistance to previous offers from claims funds and the significant capital gains taxes involved due to bitcoin’s substantial price increase since the exchange’s bankruptcy.

Regarding the claims funds, Thorn suggests that most of the partners in these funds are high net worth individuals in the bitcoin community seeking to increase their holdings at a discounted rate, rather than engaging in short-term profit-seeking trades.

The upcoming distribution of bitcoin from Mt. Gox’s trustee has sparked discussions and speculations within the crypto community about its potential impact on the market. As the process unfolds in July, market participants will closely monitor how the return of these coins influences the overall dynamics of the cryptocurrency market.