Bitcoin prices took a sharp dive on Monday following news that the trustee for the now-defunct Mt. Gox crypto exchange will be returning over 140,000 BTC to clients who lost their assets in a 2014 hack. As of the latest update, bitcoin was trading at $60,700, marking a more than 5% decline over the past 24 hours and hitting its lowest point since the start of May. Ether (ETH) and the broader CoinDesk 20 Index also experienced similar drops in value.
The sudden sell-off has left many investors wondering about the impact of releasing such a large amount of bitcoin back into the market in less than a month. To put it into perspective, this return is almost equivalent to the immediate liquidation of Fidelity’s spot bitcoin ETF, which currently holds 167,375 bitcoin.
Alex Thorn, the head of research at Galaxy, believes that the actual distribution of coins may be lower than expected, resulting in less selling pressure on bitcoin prices. Thorn’s analysis indicates that around 75% of creditors are likely to opt for the early payout in July, which amounts to approximately 95,000 coins. Out of these, Thorn predicts that 65,000 coins could end up with individual creditors, many of whom may hold onto their bitcoin rather than selling due to various reasons.
One such reason could be the significant increase in the value of bitcoin since the Mt. Gox bankruptcy, which has surged by 140 times. Thorn also suggests that the claims funds, which have been trying to acquire these assets from creditors, primarily consist of high net worth individuals aiming to expand their bitcoin holdings at a discounted rate, rather than looking for quick profits through trading.
Overall, the impending return of over 140,000 BTC to Mt. Gox clients has created uncertainty in the crypto market, leading to a drop in prices across the board. Investors are advised to closely monitor the situation and consider the potential implications of this significant development on the overall cryptocurrency landscape.