Bitcoin Major Sell-Off Coming As Mt. Gox’s $9 Billion Repayment Begins Today
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Bitcoin recently saw a 4% increase, bringing its trading price to around $63,350 and recovering some of its losses from June. Despite this positive movement, sentiment towards Bitcoin and the broader crypto markets remains cautious.
Investors are worried about a major liquidation event as the now-defunct exchange Mt. Gox begins distributing stolen tokens this week.
Mt. Gox $9 Billion Repayment Begins
Mt. Gox, a once-prominent crypto exchange that went bankrupt a decade ago following a significant hack, will begin distributing Bitcoin repayments to creditors this week. Creditors, who have waited years for compensation, are set to receive approximately $9 billion worth of Bitcoin, according to today’s prices.
In 2011, Mt. Gox lost approximately 950,000 bitcoins in a hack, a huge amount considering Bitcoin’s ATH value hitting $32 per BTC. Around 140,000 of those bitcoins were later recovered, and are now worth about $9 billion, reflecting a massive increase in value.
Mt. Gox creditors will receive 142,000 bitcoins from July to October, valued at about $9 billion at current prices. Although there is an October deadline, JPMorgan analysts believe most repayments will occur in July.
Major Sell-Off Coming
JPMorgan analysts suggest that some Mt. Gox creditors may sell part of their Bitcoin receivables this month, potentially putting initial pressure on the crypto markets.
This expectation is supported by a slight decrease in JPMorgan’s Bitcoin futures position indicator based on CME futures, indicating that mainly retail customers, not institutional investors, have been selling off crypto holdings recently.
However, analysts expect a market recovery starting in August, partly due to upcoming cash repayments from another bankrupt crypto exchange, FTX.
FTX Repayments On The Line
FTX another bankrupt crypto exchange, will also be repaying its creditors in the coming months, but these will be in cash. Estimated between $14 billion and $16 billion, these repayments are expected shortly after the final approval of FTX’s wind-down plan on October 7.
These funds could potentially support the crypto markets as crypto-native creditors may reinvest their repayments into digital assets.
