Mt. Gox announced the start of payments. What is the cryptocurrency market waiting for?

The trustee of the Mt.Gox exchange, which went bankrupt in 2014, announced plans to start paying compensation in Bitcoin, Bitcoin Cash and cash in early July.

decision was done once the preparatory process, including providing technical support, complying with each country’s rules, and coordinating transfers with each crypto exchange, is completed.

Payments will begin on a first-come, first-served basis, to platforms that have confirmed the required information.

“We have taken the time to ensure safe and reliable repayment to creditors, including technical solutions for safe repayments, compliance with each country’s financial regulations, and discussions on repayment terms with cryptocurrency exchanges.”

Mt. Gox Debtors

The market reacted nervously to the release of the news. Bitcoin (Bitcoin) fell below the $62,000 level. The decline in the value of BTC led to a decline in the quotes of other TOP 10 cryptocurrencies by market capitalization.

Bankruptcy of Mt.Gox

Mt. Gox was one of the world’s largest cryptocurrency exchanges, operating from 2010 until it filed for bankruptcy in 2014 following hacking attacks. At its peak, Mt. Gox accounted for about 70% of the total Bitcoin trading volume. In a hack in 2014, 850,000 BTC were stolen. Their current value is over $57 billion.

The process of agreeing on payments to the bankrupt Mt. Gox exchange began in June 2018. In 2021, a court approved a compensation plan drawn up by the company’s trustee.

In December 2020, a plan was introduced to pay creditors in fiat currency, Bitcoin and Bitcoin Cash (BCH). Details of the plan were made public in January 2021 and received court approval in February for a subsequent vote. The compensation plan was supported by about 83% of exchange users.

The exchange’s bankruptcy resulted in a seven-and-a-half-year legal battle before a plan was put in place to reimburse affected users in 2021. Since not all of the stolen coins were recovered, customers will only be compensated for a portion of the original amount – 142,000 BTC, 143,000 BCH, and 69 billion Japanese yen.

In December 2023, Mt. Gox customers reported return the money ten years after the collapse. Amid social media posts from anonymous users about receiving funds, the Bitcoin rate fell by 4.5%.

In late May, the Bitcoin rate fell to $67,500 after news broke that about $3 billion of Mt. Gox assets were being moved to pay customers for the bankrupt exchange. Market participants fear that exchange customers, having received billions of dollars in compensation, will start selling them, which will impact the market.

$9 Billion Bitcoin Payment

Bitcoin fell 3% after exchange manager Mt. Gox, which went bankrupt in 2014, announced plans to start paying compensation in early July. The price of the main cryptocurrency fell below the $58,000 mark, only to rise above the $61,000 level at the time of writing.

Source: CoinMarketCap

Despite concerns over Mt. Gox Bitcoin, there could be broader reasons for the volatility in the cryptocurrency market. The announcement of the distribution of bitcoins to lenders comes against a backdrop of investment exits from funds traded in bitcoins. Capital losses for regulated crypto funds exceeded $500 million for the second week. This is the highest figure in two weeks since the adoption of spot Bitcoin AND F in the USA

What market players are saying

According to Coin Shares According to chief analyst James Butterfill, the movement of funds between funds at such a pace indicates the beginning of a real correction.

Caroline Mauron, co-founder of digital asset derivatives liquidity provider Orbit Markets, agreed with her opinion. She believes that bearish sentiment is setting in and that the market is having difficulty digesting large sell orders.

Others view this market behavior as a short-term correction at the start of a bull market. Blockstream CEO Adam Back, request why creditors have already waited ten years to obtain compensation.

“It would be a strange time to sell at the beginning of a bull market.”

Adam Back, CEO of Blockstream Corp.

In May, Galaxy Digital also estimated at 75% the share of coins returned by the trustee of the platform, whose owners preferred to receive advance payment in kind with a discount.

Although the market may believe that almost all 141,868 BTC will be put into circulation this year, analysts believe that this amount will be significantly lower. It is expected that 64,697 BTC will go to individual creditors and an additional 30,000 BTC to claim funds and participants in a separate bankruptcy.

Alex Thorn, head of Galaxy Research, clarified that 20,000 lenders from a pool of nearly 65,000 BTC are early adopters of digital gold who have historically held it (11% of the supply has not moved for more than five years)

The expert notes that the majority of members of this category purchased Bitcoin at $451 or less – they remained holders despite several bear markets over a decade.

What will happen to Bitcoin in July?

According to Mark Cullen, Bitcoin will continue its decline in July. He believes that the positive dynamics of BTC could be followed by a fall towards new local minimums. The analyst does not rule out a drop in Bitcoin to $57,000 in early July. At the designated level, according to his observations, there is a liquidity pool that can act as a magnet for the crypto rate.

Trader Doctor Profit agreed with the forecast, which implies a drop in Bitcoin to $57,000. Unlike Mark Cullen, he is convinced that BTC is already on the verge of reaching a local minimum, which will be followed by an update to the absolute maximum.

The trader is sure that the current drawdown should be used to buy cheap bitcoins.

Fuente