Bitcoin
Here’s Why $9,000,000,000 in Mt. Gox Refunds May Not Impact Bitcoin Price Much, According to Galaxy Executive
The head of research at crypto financial services firm Galaxy is dispelling fears that the long-awaited Mt.Gox payments could trigger a Bitcoin crash (Bitcoin).
In a new interview on the YouTube channel Unchained Podcast, Alex Thorn says that defunct cryptocurrency exchange Mt.Gox must pay creditors around 142,000 BTC, worth almost $9 billion, from July to October.
The news of the impending BTC disbursement from Mt. Gox sent shockwaves through the crypto markets last week, triggering more than US$313 million in settlements.
But Thorn says the fear surrounding the Mt. Gox saga is probably exaggerated, as his research indicates that less than half of the coins are likely to be available to be sold on the open market after issuance. He also says that recipients will likely hold on to their BTC stack rather than selling outright.
According to Thorn, individuals who will receive their BTC in the coming months have agreed to take a 10% to 11% cut to take advantage of Mt. Gox’s early payment scheme. Thorn estimates that 75% of lenders have accepted the deal, reducing the number of BTC for delivery to 94,600 coins.
The Galaxy executive goes on to note that many people have already sold their bankruptcy claims to funds at a discount. According to Thorn, the funds were aggressively buying up claims from Mt. Gox users who didn’t want to wait years before seeing a single cent of their money.
“A lot of people have sold their coins and we think there are about 20,000 Bitcoins sitting in these funds. So let’s put that aside for a second. So now we’re at 74,000 coins.”
Thorn notes that the funds that purchased the bankruptcy credits are unlikely to be major sources of sales because he believes the entities that provided liquidity to purchase the credits will hold the coins once released.
“My understanding from talking to some of them is that they all plan to deliver in kind to their LPs (liquidity providers)… Again, from talking to some of the large LPs in these funds, as well as some of the funds that these LP bases are almost entirely comprised of high net worth Bitcoiners who effectively want Bitcoin at a discount… From doing some due diligence on this, we are pretty sure that these are actually people with diamond hands who wanted to accumulate at a discount.”
According to Thorn, the latest group that will receive BTC from Mt. Gox is cryptocurrency exchange Bitcoinica. Thorn says the exchange is ready to collect 10,000 BTC, but notes that Bitcoinica cannot sell its Bitcoin hoard immediately because it needs to go through its bankruptcy process in New Zealand.
In total, Thorn estimates that 64,000 BTC will be disbursed to the lenders’ trading accounts. The Galaxy executive believes that these entities are early Bitcoiners who are more likely to hold onto their stacks rather than sell upon receipt.
“Overall, I don’t think there will be much selling. That’s what it all boils down to. Or at least I should say I think there will be a lot less selling than a naive look at the title suggests.”
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