$3 billion from Mt. exchange customers’ bitcoins. Gox is coming soon; An alarm for the market?

Part of the stolen bitcoins of the Mt. Gox exchange (Mt. Gox) in 2011 will be released soon, and this issue has scared investors; Because they think that with the release of this amount of Bitcoin, heavy selling pressure may prevail in the market and the price of this digital currency will fall below 10,000 dollars.

To Report Crypto Slate, in 2011 the Mt. Gox was hacked and 850,000 bitcoins, worth $17.48 billion today, were stolen. Now, 137,000 units of the stolen bitcoins of this exchange worth approximately 2.81 billion dollars are going to be released in the market soon. Exchange Mt. Gox announced in 2014 that it had found 200,000 of those bitcoins; But due to the lawsuit, these bitcoins were locked.

Exchange Mt. Gox in November 2021 (Aban 1400) presented an official program aimed at “reviving” and returning lost funds to investors who lost access to their digital currencies about 7 years ago. Then, the exchange and Nobuaki Kobayashi, the trustee of the “Revival Plan”, sent an email to creditors on July 7, 2022, telling them that they could receive dollars, bitcoins, or bitcoin cash in exchange for their claims. After a long time, we are now closer than ever to the release of creditors’ funds, and this may happen as early as August.

Does the supply of such volume affect the price of Bitcoin?

As noted by Miles Deutscher, a cryptocurrency analyst and host of the Crypto Banter podcast, many investors are concerned that the supply of 137,000 bitcoins will create strong selling pressure and cause the price of the cryptocurrency to fall. .

Deutscher said on his Twitter:

Trustee of the rehabilitation plan [نوبوئاکی کوبایاشی] Responsible for paying debtors and monitoring the recovery process. According to the exchange’s balance sheet, they currently have 137,000 bitcoins, which is worth about $3 billion at current prices. Creditors can receive their funds through USD, Bitcoin or Bitcoin Cash, and this process is expected to begin in early August.

Some people even propose other theories. According to them, the decrease in the price of Bitcoin may have coincided with the update date of the Ethereum network, which will lead to the transfer of the rank of this digital currency with Bitcoin, or Flippening; That is, they think that the market value of Ethereum may exceed that of Bitcoin. This may happen when the price of Bitcoin drops to $10,000 and Ethereum increases by about 30% from its current price.

However, such fears may be unfounded; Because it is possible that many creditors have already sold their claims to digital currency investment funds. Groups such as Fortress Investment Group LLC have offered to pay creditors between $600 and $1,300 in cash early.

Michael Hourigan, CEO of Fortress, previously said:

Instead of creditors waiting another year to a year and a half, we offer those who intend to receive cash or bitcoins to buy now.

Additionally, since some creditors have not previously settled and are early investors in digital currencies, they may not be interested in selling their Bitcoins. Bitcoin is now about 60% away from its peak price. As a result, creditors are more likely to transfer their bitcoins to cold wallets instead of selling them, and this makes perfect sense.

It’s also possible that some of the released bitcoins will be converted into altcoins like Ethereum, which are nearing one of their most important moments in history. Before 2014, there were almost no alternatives to Bitcoin, while now in 2022, tens of thousands of cryptocurrency-related projects can accept investors’ money.

If the bitcoins of Mt. What happens if Gox is sold?

Some bitcoins of this exchange have already been sold. In 2018, Kobayashi sold 24,658 bitcoins, worth approximately $260 million at current prices, during a meeting with creditors.

He had said:

The sale of this amount of Bitcoin was a necessary and appropriate measure to secure the interests of the creditors for the capital and to postpone the damages caused by lawsuits related to definite and indefinite bankruptcy claims.

As seen in the chart below, the sale of these bitcoins occurred at the end of the 2017 bull market. The price of Bitcoin follows the reduction of assets accumulated in the exchange account of Mt. Gox fell, and the bear market of 2018 formed, which lasted until late 2020.

If the exchange’s remaining asset supply has a similar effect on the price of Bitcoin, the world’s largest digital currency may fall below $10,000. However, even in recent months, there has been an equal amount of selling pressure on the coin from companies such as Luna Foundation, Three Arrows Capital, and even Bitcoin miners.

Luna Foundation’s multi-billion dollar Bitcoin sale had little effect on the price and the market was able to absorb the selling pressure. In the weeks following this event, Bitcoin fell in price due to changing views in the market and the overall outlook on global factors. The market may see any selling pressure related to creditors of the Mt. Gox quickly; But the sentiments of long-time Bitcoin investors toward selling or holding their digital currency may affect the entire market and create a sharp bearish trend.