The cryptocurrency community is abuzz with discussions about the upcoming Bitcoin halving in 2024. However, there is another event that could potentially have a significant impact on the market this year. The trustee of the hacked Bitcoin exchange, Mt. Gox, has announced plans to finally repay the exchange’s creditors by the end of October 2023.
Mt. Gox, founded in 2010, was once the largest Bitcoin exchange in the world, facilitating around 70% of all BTC transactions before its collapse. In 2014, the exchange suffered a security breach resulting in the loss of 850,000 BTC, which accounted for 4% of all Bitcoin ever to be issued. This made Mt. Gox one of the largest cryptocurrency bankruptcies of all time, with creditors still waiting to be repaid almost a decade later.
As the current repayment deadline approaches, industry observers believe that the Mt. Gox repayment could significantly impact the cryptocurrency market. Jacob King, the founder and CEO of WhaleWire, predicts that the majority of creditors, who lost their Bitcoin almost 10 years ago, will sell at least a portion of their BTC once they recover it. This influx of sell orders could potentially create downward pressure on prices and lead to a market downturn.
King also highlights the prolonged delays in the Mt. Gox repayment process, which have eroded the confidence of investors in the market. Many claimants have moved on from crypto, and it is highly unlikely that they will hold on to their Bitcoin for more years. While some creditors may choose to cash out, the overall impact is not expected to cause a massive sell-off.
The repayment of Mt. Gox funds is expected to benefit more than 10,000 crypto creditors worldwide. Despite losing 850,000 BTC, Mt. Gox will only be able to repay part of the total losses due to the recovery of funds. Reports suggest that creditors will be reimbursed 142,000 BTC ($4.3 billion) and 143,000 Bitcoin Cash (BCH) worth approximately $40 million, along with 69 million Japanese Yen ($510 million). The repayments will be made using a combination of fiat currency and cryptocurrencies, with each payout coordinated individually with each investor.
Frank Weert, the co-founder of Whale Alert, acknowledges that the repayment of Mt. Gox funds will be a significant event. However, he believes that the extent of its impact on the market will depend on factors such as how the funds are released and how the media reports it. Some major creditors, including Bitcoinica and MtGox Investment Funds, have opted to receive their bankruptcy recovery funds in Bitcoin.
While many anticipate the Mt. Gox repayment to be a massive event, skeptics argue that any potential effects are likely to subside quickly. The amount of Bitcoin to be returned to Mt. Gox creditors is comparable to the holdings of Bitcoin advocate Michael Saylor, who holds at least 152,333 BTC ($4.52 billion). Mati Greenspan, the founder of Quantum Economics, points out that the current worth of the Bitcoin to be repaid can be absorbed by the market in a relatively short time frame. He also emphasizes that the distribution of Mt. Gox’s Bitcoin to many people could be beneficial for the network.
Overall, the anticipated repayment of Mt. Gox funds is a significant event in the cryptocurrency market. It remains to be seen how it will impact prices and market dynamics, but the return of funds to creditors after almost a decade will undoubtedly have far-reaching consequences.
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