Why $9 Billion in Mt. Gox Repayments Might Not Significantly Affect Bitcoin Price, Says Galaxy Executive
The head of research at Galaxy, a crypto financial services company, is addressing concerns that the upcoming Mt.Gox repayments could lead to a Bitcoin collapse. In a recent interview on the Unchained Podcast YouTube channel, Alex Thorn shared that the defunct Mt.Gox exchange is scheduled to repay creditors approximately 142,000 BTC, valued at nearly $9 billion, starting from July through October.
The news of Mt.Gox’s impending BTC distribution had a significant impact on the crypto markets last week, resulting in over $313 million in liquidations. However, Thorn believes that the apprehension surrounding the Mt.Gox situation may be exaggerated. His research suggests that less than half of the coins will likely be available for sale on the open market upon distribution. Additionally, Thorn anticipates that recipients will opt to hold onto their BTC rather than immediately selling.
Thorn explained that individuals expecting to receive BTC in the upcoming months have agreed to a 10% to 11% reduction to participate in Mt.Gox’s early payout program. Approximately 75% of creditors accepted this offer, reducing the number of BTC for distribution to 94,600 coins.
Furthermore, Thorn pointed out that many individuals had previously sold their bankruptcy claims to funds at a discounted rate. These funds actively purchased claims from Mt.Gox users who preferred not to wait years for any reimbursement. Thorn estimated that around 20,000 BTC is held by these funds, leaving 74,000 coins available for distribution.
Regarding the funds that acquired the bankruptcy claims, Thorn believes they are unlikely to engage in significant selling activities. He noted that the entities providing liquidity to purchase the claims intend to retain the coins once they are released.
Thorn also mentioned that the final group set to receive BTC from Mt.Gox includes the crypto exchange Bitcoinica, which is expected to collect 10,000 BTC. However, Bitcoinica cannot immediately sell its Bitcoin holdings as it is required to navigate through the bankruptcy process in New Zealand.
In conclusion, Thorn estimates that 64,000 BTC will be distributed to the trading accounts of creditors. He believes that these entities, mostly early Bitcoin adopters, are inclined to hold onto their BTC rather than sell it upon receipt. Thorn emphasized that he anticipates minimal selling activity overall, contrary to what initial headlines may suggest.
