Expert Calms Mt. Gox Bitcoin Liquidation Worries, Says “Creditors Aren’t Likely To Sell Soon”

The ongoing saga of the Mt. Gox exchange casts a shadow over the Bitcoin community, even years after its dramatic collapse. Recent developments have stirred the pot again, with Mt. Gox reaching out to former users to confirm ownership of accounts linked to Bitcoin payments.

This move comes amid ongoing efforts to compensate creditors, primarily in Japanese yen, through their PayPal accounts. With the repayment process expected to continue this year, the crypto community remains on edge regarding the implications of releasing Mt. Gox’s substantial Bitcoin holdings, amounting to 142,000 BTC and 143,000 BCH, in addition to 69 billion yen.

Expert Optimistic Take On Gox Coin Release

Amid the swirling rumors and speculation, renowned Bitcoin advocate and CEO of Jan3, Samson Mow, has stepped forward to offer his perspective, seeking to alleviate concerns regarding the potential market impact of unlocking “Gox coins.”

Mow believes creditors’ long wait has cultivated resilience to prevent a sudden, mass sell-off of these assets. According to Mow, even if some creditors decide to sell, the market is well-equipped to “absorb” the impact without significant disruption.

This view was echoed in response to a user named Spoonman on X, who suggested that around half of the creditors might be inclined to sell. Mow confidently stated that such selling would not co-occur, reinforcing his belief that the market can handle the situation smoothly.

Bitcoin Unexpected Reversal

Interestingly, the Bitcoin market has recently shown signs of recovery, defying some analysts’ expectations of a continued downturn. At present, Bitcoin is experiencing a 3% increase over the past 24 hours, with its trading price hovering above $40,000

However, it’s important to note that this uptick follows a significant decline, with Bitcoin down by 5.7% over the past week and over 10% in recent weeks.

This modest recovery contradicts the bearish forecast presented by Bitfinex in their latest Alpha Report, which anticipated further market downturns. Bitfinex analysts pointed out the vulnerability of Bitcoin’s price due to the reduced profitability of short-term holders.

According to the analyst, this group of investors’ potential reaction to the market conditions could lead to critical support levels being tested at around “$38,000 and $36,000,” as per the report.

However, contrary to prediction, Bitcoin has surged slightly far away from these highlighted support zones. For context, the asset currently trades for $40,037 at the time of writing.

Bitcoin (BTC) price chart on TradingView

Featured image from Unsplash, Chart from TradingView

Bitcoin Repayments: Mt Gox Starts Verifying Addresses For 200,000 BTC In Payouts

Defunct Japanese-based cryptocurrency exchange, Mt. Gox has taken the next steps toward its Bitcoin distribution process to customers who were previously affected by its 2014 hack attack. The crypto exchange has delivered mass emails to account holders as they confirm wallet addresses for individuals eligible for its repayment process. 

Mt. Gox Prepares For Bitcoin Repayments

Recently, Account holders at Mt. Gox reported in a Reddit post that they have been receiving new emails from the crypto exchange regarding an identity verification and confirmation procedure initiated by the exchange. 

Mt. Gox disclosed that it has begun confirming wallet addresses from users who had officially owned accounts at the crypto exchange and had successfully completed their identity verification processes. The crypto exchange also revealed that it would be distributing Bitcoin (BTC) and Bitcoin Cash (BCH) as part of its repayment process to account holders, with the payout ranging from 142,000 BTC to 200,000 BTC. 

Furthermore, Mt. Gox disclosed that the rehabilitation trustee has shared customer details with the custodian to facilitate the account verification process. The crypto exchange warned that customers with disabled or frozen accounts may not be eligible for the fund distribution program. 

In September 2023, Mt. Gox declared an extension of its repayment deadline from October 2023 to October 31, 2024, attributing the decision to the need for further discussions to ensure proper disbursement of funds. During December 2023, the crypto exchange encountered a slight hiccup in its payment distribution process after it announced it had unintentionally issued double payments to specific users. 

Following the error, Mt Gox urgently requested these users to return the excess funds, warning of potential legal consequences and the possibility of being excluded from the reimbursement plan scheduled later this year. 

This year marks nearly a decade since Mt. Gox suffered a hack attack resulting in the loss of a substantial 850,000 Bitcoin. Recent developments in the repayment process bring hope to former customers of the crypto exchange who were adversely affected by the cyber theft. 

Bitcoin price chart from Tradingview.com

BTC Faces $20,000 Crash If Mt. Gox Customers Commence Bitcoin Sell-Off

About 200,000 BTC presently worth over $7.7 billion, is expected to spread through multiple wallet addresses owned by Mt.Gox creditors. This raises concerns about the potential impact this Bitcoin distribution could have on the crypto market. 

Presently, Mt. Gox’s 200,000 BTC repayment amount surpasses the total value of Microstrategy and El Salvador’s Bitcoin holdings, which are among the largest in the world. 

With Bitcoin currently at $39,909, if Mt.Gox account holders receive their reimbursements and attempt a sell-off to take their profits, which have grown by a substantial 99,900%, the price of Bitcoin may dip below $20,000. This would be a monumental crash for the pioneer cryptocurrency, bringing prices back to half of their present market value. 

Bitcoin Sees Sudden Boost Amid Mt. Gox Rumors, But QCP Capital Targets $22,000

The cryptocurrency market, notably dominated by Bitcoin, has always been a terrain of speculation and market sentiment. Rumors and speculations have surfaced with Bitcoin’s recent slight uptick in value. Market insiders point towards the potential delay of the Mt. Gox repayments as a key driver.

However, QCP Capital, a crypto trading firm, remains skeptical about a sustained rally and holds a bearish outlook, indicating that global economic factors could play against the cryptocurrency.

Mt. Gox Delay Rumors Fuel Bitcoin Rally

Mt. Gox, the once-dominant Bitcoin exchange that faced a sudden downfall in 2014, is back in the news. With the April deadline for its creditors to submit repayment information having passed, there was an expectation of repayments by the end of October.

But recent rumors suggest a delay in this timeline to 2024. These speculations seem to have significantly influenced Bitcoin’s price dynamics. QCP Capital, in its market analysis, notes:

A large reason we’re seeing for this bounce is rumors of a Mt. Gox delay to 2024.

The trading firm believes many might have taken a short position expecting repayments soon, and any official delay announcement might spur a considerable short squeeze in the market.

However, the very nature of this rally has made experts cautious. Mt. Gox has a sizable cache of assets set for distribution, including 142,000 BTC (worth approximately $3.9 billion), 143,000 BCH, and 69 billion Japanese yen. Such a vast amount entering the market might create unpredictable price movements.

QCP Capital’s Cautionary Stance

Despite the recent price rally, QCP Capital’s forecast for Bitcoin remains bearish. The firm is still eyeing the $22,000 mark for BTC in the forthcoming month. They expect this uptick to be “short-lived,” with global risks looming over the cryptocurrency market in the fourth quarter.

Further dissecting the market movements, QCP mentioned:

The current Wave 2 of our C Wave expanded flat has so far bounced which we expected, but we still need to see the crucial Wave 3 that breaks the local lows for our count to be intact.

A break above $32,000 would invalidate their current assessment, according to the firm. While the imminent Federal Open Market Committee (FOMC) interest rate decision looms large, QCP sees a parallel to the market conditions of 2020, right before the infamous Covid crash.

Although there’s market speculation around a potential volatility squeeze, QCP believes that a pause in rate hikes by the FOMC is the more likely outcome.

But challenges persist, “At the same time, we do not see how Powell can assuredly call an end to this hiking cycle,” the firm adds, pointing to rising inflation and other economic factors. Additionally, concerns about a potential US government shutdown and increasing oil prices add to the economic uncertainty.

In QCP’s assessment, the stock market might witness a downturn without Federal Reserve intervention, potentially dragging Bitcoin with it. The firm concluded:

In such a scenario without Fed easing, equities will likely be down, taking Bitcoin down along with it until the Fed acts.

Bitcoin (BTC) price chart on TradingView

Featured image from iStock, Chart from TradingView