The upcoming repayment of $8.5 billion worth of Bitcoin to creditors by Mt. Gox next month might not have as much of an impact on the price of Bitcoin as anticipated, analysts say.
According to IG Markets analyst Tony Sycamore, there are too many historical factors to make a definitive prediction about the effect of the upcoming repayments. However, it is estimated that around half of the total Bitcoin, which is roughly $4.5 billion, could hit the market starting in July.
Mt. Gox, a Japanese cryptocurrency exchange, collapsed after being hacked in February 2014, losing about 940,000 BTC, which was valued at $64 million at the time. The exchange managed to recover 141,687 BTC to return to its creditors, which is now worth $8.5 billion. These repayments will begin in July.
Despite the potential influx of Bitcoin into the market, Sycamore believes that much of the anticipated Mt. Gox sell pressure has already been factored into the current market conditions. He also mentioned that the repayments have been expected for a long time.
Furthermore, Sycamore pointed out that the repayments are happening amidst a backdrop of declining market sentiment, technical selling, and outflows from the Bitcoin ETFs. He added that a significant amount of speculative “hot money” in crypto had moved to other markets such as equities.
Regarding Bitcoin’s price action, Sycamore expressed optimism, noting that the strong support on the 200-day moving average could lead to positive outcomes in the coming weeks.
Alex Thorn, head of research at Galaxy Digital, estimated that only 65,000 of the total 141,000 Bitcoin is expected to hit the market, thus reducing much of the anticipated selling activity.
Thorn also explained that there are several reasons to believe that Mt. Gox creditors would be more resilient than expected. He highlighted that most creditors were long-term Bitcoin holders who are inclined to hold onto their Bitcoin. Additionally, the impact of capital gains tax on sellers was noted, as well as the fact that many claim holders have gained significantly since the recovery of their Bitcoin.
In conclusion, Thorn suggested that the potential selling pressure on Bitcoin Cash would be more severe, given the circumstances surrounding its acquisition by investors.
Finally, he mentioned that many Mt. Gox creditors resisted offers for USD payouts, indicating their preference for Bitcoin over fiat.