Mt.Gox is currently working on repaying its creditors a staggering $9.4 billion, which is putting pressure on the Bitcoin (BTC) market for a potential selloff.
Despite the impending selloff, there are other key trends within the network that could help soften the impact. BTC, the top cryptocurrency globally, is facing intense scrutiny as Mt.Gox initiates the repayment process to investors, transferring 137,890 BTC coins from its wallets to creditors.
The movement of such a significant amount of BTC has raised concerns about a possible sell-off that might drive down Bitcoin’s price. Mt.Gox, once a major Bitcoin exchange, was hacked in 2014, leading to the theft of 840,000 BTC. Following the hack, the US Department of Justice identified two Russian nationals as the hackers responsible for the stolen funds.
Last year, the Japanese government approved a rehabilitation plan that would allow creditors to recover some of their lost funds. The recent movement of BTC coins is believed to be part of this distribution process.
The potential influx of BTC from Mt.Gox repayments has divided experts, with some fearing it could flood the market and cause a price drop. This concern is amplified by the recent 4% decrease in Bitcoin’s price, indicating that some investors have already started cashing out on its recent surge.
The Bitcoin market can generally be categorized into Long-Term Holders (LTHs) and Short-Term Holders (STHs). LTHs are investors who have held onto their BTC for over 155 days and are typically less swayed by market fluctuations. On the other hand, STHs are investors who have purchased Bitcoin within the past 155 days and may react more quickly to negative market sentiment.
The actions of these investors could impact the anticipated selloff from the Mt.Gox Bitcoin distribution. Despite the concerns, some positive sentiments are emerging for BTC. Crypto analyst James Van Straten highlights the market’s resilience in absorbing large selloffs, citing instances where Grayscale Bitcoin Trust and LTHs offloaded around 1 million BTC without significant price disruptions.
Data from research firm Glassnode also indicates a decrease in the number of Bitcoin addresses holding coins for over 5 years, suggesting that some long-term investors are taking profits. This implies that not all creditors will rush to sell their recovered BTC, with some potentially opting to hold or even buy more based on their investment strategies.
As of the current moment, BTC is trading at $66,003 with a 0.38% decline over 24 hours. The market cap stands at $1.3 trillion, with a trading volume of $17.6 billion. For more information on Bitcoin, including guides, tutorials, and news, check out the recommended resources listed above.