NAIROBI (CoinChapter.com) — Failed bitcoin exchange Mt. Gox will begin repaying customers in July 2024, nearly a decade after its 2014 bankruptcy. The repayment amount remains uncertain, ranging from 65,000 to 140,000 BTC, valued up to $9 billion at the upper end.
The potential influx of these bitcoins into the market has raised concerns among investors about increased selling pressure. Bitcoin prices fell below $60,000 following the news, continuing a downward trend observed throughout the month.
What Happened To Mt. Gox?
Mt. Gox, once responsible for 70% of global bitcoin trading, experienced multiple hacks between 2011 and 2014, leading to the loss of thousands of bitcoins. The exchange declared bankruptcy in 2014, leaving customers in a prolonged attempt to recover their funds.
Rehabilitation Trustee Nobuaki Kobayashi confirmed that preparations for repayments are nearly complete, and all necessary safety measures in place.
“The Rehabilitation Trustee will commence the repayments in Bitcoin and Bitcoin Cash in due course to the cryptocurrency exchanges with which the Rehabilitation Trustee has completed the exchange and confirmation of the required information for implementing the repayments,”
The trustee stated.
Rehabilitation Trustee Nobuaki Kobayashi announced that preparations for repayments are in progress, with all necessary safety measures in place. Alongside Bitcoin, customers will receive Bitcoin Cash, a cryptocurrency created from a Bitcoin hard fork in 2017.
This move follows the transfer of over 140,000 BTC from cold wallets to an unknown address in May, marking the first movement of funds in five years.
Why Are the Repayments Making Crypto Investors Nervous?
The impending repayments could exert significant selling pressure on Bitcoin and Bitcoin Cash markets. Eric Balchunas, Senior ETF Analyst at Bloomberg Intelligence, underscored the potential impact, noting that this influx might negate over half of all ETF inflows in one instance. Since January 2024, inflows into spot Bitcoin ETFs have driven up prices, with products accumulating over $14.5 billion in net inflows.
Early investors, especially those who entered the market before 2013, might feel tempted to sell part of their holdings due to the substantial increase in value since their initial investment.
However, some experts argue that the potential sell pressure might be overstated. Alistair Milne, CIO of Altana Digital Currency Fund, contends that Mt. Gox creditors need funds and have had nearly a decade to sell their claims, suggesting that no distressed sellers remain.
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