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As of 24 July 2024, Mt.Gox has completed about 40% of its repayment plan, distributing over 53.000 BTC to 13,000 creditors. For years, crypto investors have feared the start of Mt.Gox repayments, predicting a huge collapse in price for Bitcoin.Now, the repayments have started, with $3B already distributed to creditors across two of the five crypto exchanges – Bitbank, SBI VC Trade, Bitstamp, Kraken and BitGo.According to Arkham’s report, the repayments were made to Kraken and Bitbank in two big transfers:<ul><li>1,545 BTC to Japanese exchange Bitbank on July 5, worth $84.9 million then and $98.9 million now.</li><li>48,641 BTC to one of Kraken’s addresses (July 16) — $3.07 billion then, $3.11 billion now.</li><li>2,362 BTC to one of Bitstamp’s addresses (July 23), worth $155 million</li></ul>Interestingly enough, Mt.Gox has already repaid 70% of all its creditors but only distributed 40% of its assets. The remaining creditors are heavy hitters like Blockstream co-founders Gregory Maxwell and Adam Back and Fortress Investment Group.In this article, we’ll go on an in-depth review of what the Mt.Gox repayment will mean for the market and how will Bitcoin’s price move after all the repayments are done. Enjoy!<h2 id="header-0">What is Mt.Gox and How It Collapsed?</h2>Mt. Gox was once the largest Bitcoin exchange in the world. Launched in 2010 by Jed McCaleb, it was initially a platform for trading Magic: The Gathering cards (hence the name &#34;Mt. Gox&#34; - Magic: The Gathering Online eXchange).McCaleb sold the site to Mark Karpelès in 2011, who transformed it into a cryptocurrency exchange. At its peak, Mt. Gox handled over 70% of all Bitcoin transactions globally.The collapse of Mt. Gox was a significant event in the history of Bitcoin and the broader cryptocurrency market. The downfall began to unfold publicly in February 2014, when the exchange halted all Bitcoin withdrawals.It cited a technical issue involving transaction malleability, a flaw that allowed transaction details to be altered without changing the unique transaction ID. This explanation was met with skepticism by many in the crypto community.Further investigations revealed a much more severe problem. On February 24, 2014, Mt. Gox suspended all trading, closed its website, and filed for bankruptcy protection in Tokyo.A few days later, the company announced that ~850,000 Bitcoin, worth around $450 million at the time, had been stolen, likely due to a combination of poor security practices and a series of hacks dating back to 2011.The fallout from the collapse was extensive. Thousands of customers lost their funds, and confidence in crypto exchanges was severely shaken.Legal proceedings ensued, with CEO Mark Karpelès being arrested in 2015 and charged with embezzlement and data manipulation, though he was later acquitted of embezzlement.The remaining Bitcoin, worth around $9B at today’s prices, is going to be repaid according to a schedule designed by the trustee and the financial regulatory bodies of Japan.<h2 id="header-1">Who Are the Creditors?</h2>Before diving into what the repayments have done, or will do, to the crypto market, it’s important for us to understand what entities will receive the Bitcoin from Mt.Gox and when that will happen.For now, the collapsed exchange has repaid nearly 70% of its creditors using only 40% of the assets it had. That’s because the top 1% of creditors together account for over 50% of all assets. The top 0.1% – only 23 claims – share 27.3% of all assets.How did that happen? Simple – private equity firms like Fortress bought up Mt. Gox creditor assets at a discount to the nominal value.However, buying the assets can only get you so far, which means that Mt.Gox already had big whales holding Bitcoin on the exchange at the time of the collapse.Here, we’re talking about Kraken founder Jesse Powell (who also worked as a consultant at Mt.Gox,) Jed McCaleb (the founder of the exchange), and Roger Ver.<h2 id="header-2">Who Will Sell?</h2>Now, a more important question is this: who will decide to sell their assets immediately after getting their hands on them?For starters, we already have data on smaller creditors that received their Bitcoin from Mt.Gox. There has been a significant increase in BTC withdrawals from Kraken after affected Mt.Gox users started receiving their BTC.This could be a positive signal, indicating that they are not selling and are preparing to hold their coins, moving them from the exchange to cold wallets.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe-LvG0mSeTeTjnk-D6kOV6zn88SQfqlx48QmnhYerc8atpXq8ERhrqOn-3mrd9zQrl_U3puB3fTUzBRCF3dPSJvOBV70j9xlw5k7JJ3ZCK21EN6uEdXz0AretWGWmSp_fUnLniynlc5N6ZcArA-lHh6rqC?key&#61;DZT365N02gcpp4gkWT-ofw" />Companies like CoinLab and Bitcoinica will immediately sell their assets if they haven’t sold the claims long ago. That’s because these are bankrupt entities that held a part of their operational funds on Mt.Gox.On the contrary, big whales like Jesse Powell will most probably continue holding the assets.These are diamond-handed individuals who believe in the asset itself and don’t need the liquidity. Remember, they could’ve easily sold a big portion of their assets to Fortress or other entities that bought the creditor claims.However, the most important entities still remain the investment funds that hold the majority of claims.According to a Bloomberg article from last year, the Mt.Gox Investment Fund – the largest creditor of Mt.Gox – doesn’t plan on selling the asset right after the repayment starts.Fortress (probably the second-largest creditor of Mt.Gox) will probably be more prone to selling the assets.<h2 id="header-3">How Did Mt.Gox Repayments Affect the Crypto Market So Far?</h2>Immediately after Nobuaki Kobayashi, Mt.Gox’s trustee, announced the start of the repayment schedule, Bitcoin reacted negatively, falling all the way to $54.000 on July 7.This sharp decline triggered a wave of liquidations across the crypto market, wiping out over $425 million in leveraged positions. The volatility extended beyond Bitcoin, affecting the entire cryptocurrency market, with many altcoins experiencing double-digit percentage drops.However, was this price action caused solely by the Mt.Gox repayments?The short answer is no. The Mt.Gox repayment announcement was accompanied by another significant event for Bitcoin – the German Government’s BTC offload. In only two weeks, the German government sold over $2.8 billion in Bitcoin, which is almost 33% of all the assets held by Mt.Gox.Even though the German government sold most of its Bitcoin over the counter to avoid selling pressure, the market reacted, and BTC stayed below the $60.000 resistance level for almost two weeks until the entity sold all its assets.The offload of the German Government AND Mt.Gox caused Bitcoin to break the $55.000 resistance level and keep it cool for a while until something unexpected happened.Rostin Behnam, the chief of the U.S. Commodity Futures Trading Commission (CFTC), has reiterated his call for his agency to oversee Bitcoin and Ethereum, the two largest cryptocurrencies by market cap, by classifying them as commodities.In his testimony before the U.S. Senate Committee on July 9, Behnam cited a recent Illinois court ruling that supports this classification, probably putting an end to the security vs. commodity debate.His testimony leveled the volatility caused by Mt.Gox and the German Government, bringing Bitcoin back above the $65.000 resistance level. But we’re far from done, with Mt.Gox waiting to unload another $6B worth of Bitcoin in the next months.<h3 id="a-look-at-bitcoin-s-price-movement-ahead-of-us">A Look at Bitcoin’s Price Movement Ahead of Us</h3>All metrics show that the Mt.Gox price impact is overestimated, as the market is more than ready to absorb twice the liquidity inflow Mt.Gox shows.“Even if Mt. Gox’s $3B is sold on Kraken, it’s just 1% of the realized cap increase in this bull cycle — manageable liquidity” – CryptoQuant CEO Ki Young Ju.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeXLLm45xf2zPtRjNn0WGj20ATDq_k3VnXfi5BVAksQ0f-7QaN-e42l3eAvz4TrcLKMHn_TeSbh2AUCDyIPYExiMf8QfD1zQ-NjZVtF_GExjVl_mOaLha2j0t_yOsOv9U_NcZRlULVH41AP110Q5XFbkBNH?key&#61;DZT365N02gcpp4gkWT-ofw" />The market has already absorbed $5.8B worth of Bitcoin from the early repayments of Mt.Gox and the German Government’s BTC offload – which means that another $6B wouldn’t probably hurt the investors that much.But how is that possible, and why have investors feared Mt.Gox for so long?The answer is simple—the crypto market has evolved. If the repayments had started back in 2017 or 2019, the market would’ve easily collapsed due to a lack of liquidity and maturity in the cryptocurrency ecosystem.Now, the selling pressure was absorbed easily, as Bitcoin has become a more mainstream financial instrument than ever before.One big factor that made it possible was the existence of Bitcoin ETFs in the American market. The ETFs alone have absorbed $17B in net inflows from July 2 to July 19, setting a record high for any existent ETF.<img src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcmIKrUEhCPVj7ChzuNrddl2o4nkq2j07GOYuT4w6kCzwuGZXR4RBxuvYyqI1U2-6dXv753JLbCoZqr0brYJvTq_8TGdfsnDwhbbd_AUKSNVwWUmmZbKRTw7EjeKR0ScRq1Pc7joYP-Pt0gPdnMwhqPGb5C?key&#61;DZT365N02gcpp4gkWT-ofw" />No doubt, some of that Bitcoin was coming from the German Government or the Mt.Gox repayment schedule.However, even if the Bitcoin price would go back to ~$50.000 after Mt.Gox offloads the rest of its BTC, it won’t hold that level for too long.The US presidential election is coming, and after the attempt on Trump’s life, it’s clear who will win it. The former president of the United States has already stated his intention to create a powerful crypto hub in the United States, becoming a hardcore advocate of crypto and Bitcoin.<h2 id="header-4">Closing Thoughts</h2>To sum everything up, the Mt.Gox repayments won’t probably have a lasting effect on the crypto market and Bitcoin.With the help of Wall Street’s deep pockets, the market will absorb the rest of Mt.Gox’s Bitcoin without major volatility spikes and price drops.

Will Mt.Gox Kill the Market This Week?

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Satoshi_Club

Інші статті, опубліковані 24 лип. 2024 р.

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