Key Points
- Mt. Gox’s announcement of a $9 billion Bitcoin repayment plan led to a significant drop in Bitcoin price.
- Analysts argue that the market has overreacted and the repayment plan is not the primary cause of the price drop.
After Mt. Gox revealed its $9 billion Bitcoin repayment plans in early July, the Bitcoin price experienced a significant sell-off on June 24. The selling pressure was so immense that Bitcoin’s price dropped below $59,000 before rebounding to $61,000.
Analysts’ Perspective
However, some market analysts view this as an excessive reaction, stating that the Mt. Gox’s repayment plan may not be the primary cause of the Bitcoin price turbulence. Tony Sycamore, an analyst at IG Markets, suggested that markets are overconsidering the impact of the upcoming movement. He mentioned that half of the Bitcoins with Mt. Gox, worth $4.5 billion, could enter the market in early July.
Despite the potential influx of Bitcoins into the market, Sycamore believes that the supposed selling pressure is already factored into the current Bitcoin condition. He pointed out that a significant portion of speculative funds in crypto have moved to pursue more promising opportunities in high-cap stocks such as Nvidia and Apple within the equities market.
Mt. Gox, a Japanese crypto exchange, collapsed in February 2014, leading to a loss of 940,000 BTC, valued at just $64 million at that time. The team at Mt. Gox managed to recover 141,687 BTC and plans to return them to the creditors. The current value of these Bitcoins available for redistribution is close to $9 billion.
Bitcoin’s Price Movement
Sycamore also discussed Bitcoin’s price movement in a broader context, expressing skepticism about the potential for further significant declines in the current sell-off. He cited robust support at the 200-day moving average as a factor instilling optimism for the upcoming weeks.
In a post on X, Alex Thorn, head of research at Galaxy Digital, estimated that only 65,000 of the 141,000 total Bitcoins with Mt. Gox will hit the market. Thorn estimated that about 75% of creditors chose an “early” payout, accepting a 10% reduction in their repayment, which initially injected approximately 95,000 BTC into the market. He also noted that 20,000 BTC were allocated to claims funds, and around 10,000 BTC were owed to Bitcoinica BK, leaving approximately 65,000 BTC for regular creditors.
