Bitcoin
JPMorgan, CoinShares Predict Bitcoin Shift Due to $9 Billion Mt. Gox Payout
As Mt. Gox prepares to distribute approximately $9 billion in Bitcoin to its creditors, analysts at JPMorgan and CoinShares anticipate significant implications for BTC. Mt. Gox was once the largest Bitcoin
exchange before its collapse in 2014. Now, the bankrupt exchange is expected to return around 141,000 BTC to users who lost funds during its shutdown.
Impact of Mt. Gox Refund on Bitcoin
The impending payout from Mt. Gox amounts to about 0.7% of the total 19.7 million Bitcoins currently in circulation, which is a significant holding. As such, CoinShares’ head of research James Butterfill expressed concern about the potential market impact of such a massive Bitcoin release. He noted that the release of this Bitcoin hoard has been a concern for those bullish on BTC.
Furthermore, it indicates market sensitivity to news related to such events. Butterfill noted, “With the announcement that the Trust will begin selling in July, investors are understandably concerned,” according to a CNBC report.
John Glover, Chief Investment Officer (CIO) at Ledn, echoed these sentiments. He foresees a scenario in which many creditors may choose to sell their Bitcoins for gains. Glover noted: “Many will clearly cash out and take advantage of the fact that having their assets tied up in the Mt. Gox bankruptcy was the best investment they ever made.”
Furthermore, his observation highlights the dramatic increase in Bitcoin’s price since the closure of Mt. Gox. The price of BTC has skyrocketed from around $600 per coin in 2014 to over $63,200 today. Previously, Bitcoin reached a high of $73,800 in March 2024, potentially due to the launch of spot BTC ETFs in January.
Furthermore, JP Morgan Analysts also assessed the potential impact of Mt. Gox’s creditors liquidating its bitcoin holdings. They anticipate the sell-off could put pressure on bitcoin prices in the short term. In a recent research note, JPMorgan analysts stated: “Assuming that the majority of settlements by Mt. Gox occurs in July, this creates a trajectory where cryptocurrency prices come under additional pressure in July, but begin to recover from August onwards.”
Read too: Breaking News: US Government Moves $12 Million in Ethereum. Is a Bitcoin-Style Sell-Off Coming?
Gemini Effect to Continue with Mt. Gox Refund
The anticipated Bitcoin selloff follows a similar pattern seen on Gemini, another cryptocurrency exchange. Earlier last month, Gemini returned over $2 billion worth of Bitcoin to users in June. This event coincided with a significant recovery in Bitcoin’s price after Gemini resumed withdrawals from its Earn lending program, which had been suspended months earlier.
Analysts at JPMorgan also drew parallels to this recent event. They noted that Gemini’s return of funds led to negative price movements as retail clients likely took profits out of Bitcoin. Furthermore, they suggested that a similar scenario could unfold with Mt. Gox’s creditors.
Analysts at JPMorgan expected some lenders to choose to sell their Bitcoin holdings to capitalize on the cryptocurrency’s impressive gains. Additionally, a worrying liquidation trend has been noted for the German and American governments. Today, the German government offloaded another 400 BTC to Coinbase, Kraken, and Bitstamp.
The latest dump pushes the German government’s total Bitcoin sale to over 2,700 BTC since June. Additionally, the US government divested a whopping 4,000 BTC last month. These sales had a huge impact on the price of Bitcoin due to the FUD in the market.
Furthermore, just the announcement of Mount Gox refunds pushed the price of BTC to $59,000 in June. This suggests that with the actual payment, the price of Bitcoin could be ready for an even bigger drop. Furthermore, miner capitulation increased due to a massive drop in hash price, suggesting further liquidations.
Read too: Breaking News: German Government Dumps 400 BTC to Major Exchanges, Wave of Transfers Continues