Mt. Gox, a once big crypto exchange that shut down in 2014 after a hack, will finally give back some Bitcoin they stole from customers back in July.
Mt. Gox, an old failed Bitcoin exchange, is giving back some Bitcoin to people who lost it in a hack years ago. This could bring a lot of Bitcoin into the market at once, which might make the price go down. But some experts say it might not be that bad, and the price might not drop as much as people fear.
History of Mt. Gox
Mt. Gox was a cryptocurrency exchange based in Japan that operated from 2010 to 2014. In its prime, it was a giant in the young cryptocurrency world, handling over 70% of all Bitcoin transactions globally. However, a series of security breaches and operational failures led to its collapse in early 2014, resulting in the loss of approximately 850,000 BTC, worth around $450 million at the time.
After Mt. Gox shut down, a person named Nobuaki Kobayashi was in charge of trying to fix things. This includes selling some of the Bitcoin they got back to pay people who lost money in the hack. They’ve already been selling some Bitcoin here and there to make those payments.
The person in charge of returning money to Mt. Gox users, Nobuaki Kobayashi, might have a giant pile of Bitcoin worth about $10 billion! This is because Mt. Gox got some Bitcoin back after the hack, and they’re selling it to pay people back.
Mt. Gox Bitcoin Sell-Off: Crypto Traders Eased Fears
The defunct crypto exchange’s trustees said they are preparing to distribute the bitcoin (BTC) stolen from clients in a 2014 hack in the first week of July.
Market observers were worried that when Mt. Gox sold a lot of Bitcoin back into the market, it would bring the price way down. However, according to crypto traders, the selling pressure may not be as bad as initially feared and think that the price drop won’t be that big.
There are several reasons behind this prediction. They’ll likely sell the Bitcoin slowly, not all at once. The market is much bigger now and can handle more selling without a big price drop. There are more rules in place now to prevent wild price swings. So, while it’s a big deal, it might not be as bad for the price of Bitcoin as some people fear.
The Mt. Gox repayments have been anticipated for a long time, so the potential impact might already be reflected in the current Bitcoin price.
“The impact on bitcoin’s price from Mt. Gox distributing Bitcoin is likely overblown,” Sam Callahan, senior analyst at Swan Bitcoin, said in a Tuesday email to CoinDesk.
Some Mt. Gox users might be those who invested early and held onto their Bitcoin since then. They might be less likely to sell right away, considering the huge price increase over time.
“Creditors who wanted to sell their bitcoin have now had more than 10 years to do so through selling their bankruptcy claims to more convicted, long-term investors”.
“In addition, most creditors will likely hold their bitcoin because their cost basis is less than $700 per bitcoin,” he added.
Mt. Gox Sell-Off: Less Bitcoin Than Expected?
In a Monday note Galaxy Research indicate that Mt. Gox won’t be giving back all the Bitcoin they owe. Out of the total 141,000 Bitcoin recovered and earmarked for distribution, only 65,000 will go directly to individual customers. Another, 30,000 BTC will be delivered to claim funds.
The rest will be used for other purposes related to the bankruptcy.
The firm soothes the market observers’ concerns in the post on X stating “It’s reasonable to assume that most of the BTC received by funds that acquired claims from creditors will be distributed to LPs in kind and not sold off,”
Mt. Gox is preparing to distribute Bitcoin stolen in a 2014 hack, but the exact amount remains unclear. The exchange consolidated around 140,000 Bitcoin, worth roughly $9 billion at the current price from multiple cold wallets to a single address in May. However, it’s not guaranteed that they’ll distribute this entire amount.
Investors fear of significant sell-off leading to a Bitcoin’s price decline. The price dropped over 4% in a single day, dipping below $60,000 for the first time since early May.
The Mt. Gox situation and its rehabilitation process are causing concern in the crypto community. The trustee holds $10 billion worth of BTC, which raises questions about market stability. However, experts believe fears might be exaggerated. Trustee Nobuaki Kobayashi’s careful approach to asset sales, combined with the crypto market’s resilience, could lessen worst-case scenarios. Investors will closely watch for updates on BTC sales. One should conduct their own research and consider the inherent risks of investing in cryptocurrencies.
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