While the cryptocurrency community is actively discussing the next Bitcoin (BTC) halving in 2024, there is a chance that another major market event will occur this year.
The trustee of the hacked Bitcoin exchange Mt. Gox will finally pay off the exchange’s creditors by the end of October 2023. If that happens, the cryptocurrency market could be significantly affected in a number of ways, some industry observers agree.
Founded in 2010, Mt. Gox was once the world’s largest Bitcoin exchange, estimated to have facilitated around 70% of all BTC transactions before its implosion.
The now-defunct exchange lost 850,000 BTC, or 4% of all Bitcoin ever issued, in a security breach in 2014. The event turned Mt. Gox into one of the biggest cryptocurrency bankruptcies of all time, with creditors still to pay. nine years later.
With Mt. Gox’s current payment deadline scheduled to occur in about three months, Cointelegraph has reached out to some cryptocurrency executives to find out what to expect from Mt. Gox’s early payment.
What will investors do once they get their Bitcoin back?
The Mt. Gox redemption will be a one-time event, sure to have a significant impact on the market, believes WhaleWire founder and CEO Jacob King.
After losing all of their Bitcoin nearly 10 years ago, most creditors are likely to sell at least some of their BTC once they finally get it back, King told Cointelegraph.
“This influx of sell orders could create downward pressure on prices and potentially lead to a market downturn,” he said. King also cited multiple lengthy delays in the Mt. Gox payment process, which has already caused a sense of “disappointment among investors, eroding their confidence in the market.”
The WhaleWire CEO continued:
“It’s a simple question of, what will investors do? Over the past year, we have seen more sells than buys, and many of those who lost on Mt. Gox have left crypto behind. The chances they have for more years, after everything that happened, are very unlikely.
“We’re sure some will be happy to finally withdraw money, but we doubt it will trigger a sell-off,” he said. When asked if the crypto industry has ever seen a similar event, Weert said that there has never been an event of such a scale until now.
Some of Mt. Gox’s own creditors admit that the Bitcoin market may face some selling pressure once the payment is made. However, many claimants are likely to continue to HODL, a trader who described himself as a Mt. Gox creditor told Cointelegraph. He stated:
“When we have our coins, I think we will all hold. But when word gets out to the world that these coins are going to be released, people who have coins but are not the claimants will sell them out of fear that the price will go down.”
How much will be returned?
Mt. Gox expects to pay a total of more than 10,000 crypto creditors from around the world by the end of October. Despite the fact that the exchange lost 850,000 BTC, Mt. Gox will only pay a portion of the total losses from the attack because the company was only able to recover some of the funds.
According to online reports, Mt. Gox will repay its creditors 142,000 BTC ($4.3 billion) and 143,000 in the forked cryptocurrency Bitcoin Cash (BCH), worth approximately $40 million. The bankrupt exchange will also reportedly pay 69 million Japanese yen ($510 million). Payments will be made using a mix of fiat and cryptocurrency, with each payment being coordinated individually with each investor.
The repayment of the Mt. Gox funds will be a huge event, agrees Whale Alert co-founder Frank Weert. But how it influences the market will depend a lot on how the funds are released and how it is reported by the media, the executive told Cointelegraph.
Some major creditors, including Bitcoinica and MtGox Investment Funds, reportedly opted to have their bankruptcy recovery funds paid out in Bitcoin.
According to data from the Mt. Gox balance bot on Twitter, the MtGox trustee has 135,890 BTC in all known addresses at the time of writing.
Total current balance on all known addresses* of the MtGox administrator: 135890.98002134 BTC.
—MtGoxBalanceBot (@MtGoxBalanceBot) July 11, 2023
Mt. Gox Bitcoin Redemption Amount Is Close to Michael Saylor’s BTC Holdings
While many cryptocurrency enthusiasts believe the Mt. Gox payout will be a massive event, there are also some skeptics who are confident that any potential effects are likely to wear off quickly.
The amount of Bitcoin to be returned to Mt. Gox creditors is comparable to the holdings of Bitcoin advocate Michael Saylor, who owns at least 152,333 BTC ($4.52 billion).
“Either way, it doesn’t sound like much,” Quantum Economics founder Mati Greenspan told Cointelegraph. Referring to the current value of Bitcoin that must be paid, Greenspan emphasized that the current daily volumes on the chain are much higher.
Related: $30 Billion Stolen From Crypto Ecosystem Since 2012: Report
“Daily on-chain volumes average $12 billion, exchange volumes are reportedly around $18 billion per day,” he noted, adding:
“So this is certainly something that the market can absorb in a relatively short period of time. I assume that there may be some selling pressure due to the speculation surrounding this event. A lot of people don’t know basic math.”
Greenspan also emphasized that Mt. Gox Bitcoin will be distributed to many people, which could be very good for the network as a “mass distribution event.”
“There are many OGs that will be reactivated. Some of them will sell and wash their hands of it, but I bet many will be staunch advocates of self-custody,” he added.
The executive also expressed optimism about the potential payout, stating that Mt. Gox-related FUD has been “plaguing the market” for many years and it will be “nice to see it finally in bed.”
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This post Mt. Gox Payment Date Coming Up: Is Bitcoin in Trouble?
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