Source: Blockchain Knight
The dormancy of Mt. Gox may not have ended yet, but a series of tokens flowing out of its wallet has already caught the market’s attention.
It is speculated that a total of 137,890 BTC worth $9.4 billion will be transferred to the wallets of creditors, with experts having varied reactions to this development. Most are concerned that the selling pressure of BTC may increase, leading to a drop in BTC prices.
Mt. Gox was once a leading BTC exchange in the world, but in 2014, it fell victim to a hacker attack, losing over 850,000 BTC.
After years of legal battles, Japanese authorities finally approved a revival plan in 2021, initiating a legal process known as “civil rehabilitation” that allows creditors to recover some of their lost funds.
The plan is now in effect, and creditors of the lost funds can now receive a portion of the remaining funds.
Mt. Gox plans to repay creditors, which may have contributed to a 4% drop in BTC prices in the past 24 hours. However, the market may eventually overcome this impact and rebound.
Nevertheless, there are concerns that the newly released BTC may flood the market, leading to more selling and further price declines.
Former Mt. Gox CEO Mark Karpeles confirmed in an official statement that while BTC selling has not occurred yet, the transfer of tokens from Mt. Gox to a new wallet is part of a larger plan to distribute to creditors.
According to investors’ holding time, the BTC market can be broadly divided into two categories: Long-Term Holders (LTHs) and Short-Term Holders (STHs).
– Long-term investors: These investors have held BTC for over 155 days.
– Long-term holders: They are usually considered more resolute in market downturns and less likely to panic sell.
– Short-term holders: These investors have purchased BTC in the last 155 days. They typically react faster to market news and events and may respond more quickly to negative sentiments with selling.
CryptoSlate senior analyst James Van Straten shared a perspective, revealing how Grayscale BTC Trust long-term holders sold about 1 million BTC in the past five months.
The market has shown impeccable resilience in digesting these sales. In contrast, Mt. Gox’s repayment to creditors is only 1/10 of the 1 million BTC sold.
The recent surge in BTC reached this year’s historical highs before halving, prompting some long-term holders to sell, as evidenced by the decrease in their total supply.
Van Straten believes that recent LTH sales will overshadow Mt. Gox’s repayment through released BTC quantities.
According to on-chain data, research firm Glassnode’s earlier data this year showed a record low in the number of BTC addresses holding BTC for over 5 years, indicating some long-term investors are taking profits.
The large-scale movement of BTC has raised concerns that Mt. Gox’s creditors may decide to sell the BTC they recover on exchanges, flooding the market and driving prices down.
The daily average inflow of BTC into exchanges has been hovering around 2016 levels, suggesting that the liquidity to absorb large sell-offs may be low, amplifying these concerns.
However, not all creditors who receive BTC will immediately sell the recovered BTC compared to this larger-scale LTH selling. The distribution has not yet officially taken effect.
Among creditors, some may choose to hold or buy more based on their investment strategies.
While the direct response of the market may be negative due to the panic of short-term investors, resolving the Mt. Gox incident may enhance investors’ confidence in the overall health of the BTC ecosystem.
The Mt. Gox incident and its potential impact on BTC prices highlight some vulnerabilities that need to be addressed, especially at critical moments in the market’s maturity.
While short-term fluctuations are expected, especially when a large amount of BTC is being transferred, stability in the market and increased liquidity will boost investor confidence and set a secure tone for the long-term performance of BTC.
How will Mt Goxs 94 billion worth of BTC impact the market