Mt. Gox July Repayment Announcement Sparks Speculation of Bitcoin Price Bottom

Key Takeaways

• Mt. Gox will reportedly distribute billions of dollars in Bitcoin and Bitcoin Cash to creditors starting in July 2024.
• The repayments may impact the market, with potential downward pressure on BCH and uncertain effects on BTC.
• Market sentiment is mixed, with historical patterns suggesting a potential Bitcoin rebound, while concerns remain about selling pressure and previous repayment delays.

Mt. Gox, the notorious defunct Japanese cryptocurrency exchange, has announced  it will begin distributing recovered Bitcoin (BTC) and Bitcoin Cash (BCH) to creditors starting in July 2024.

This marks a significant milestone in the ongoing rehabilitation plan that commenced following the exchange’s collapse in 2014 due to a massive hack. After the repayments were made public, the crypto community began speculating  if Bitcoin had reached its lowest point, looking at past trends for clues.

Mt. Gox to Return Billions in Bitcoin and Bitcoin Cash to Hack Victims

According to court documents  and creditor reports, Mt. Gox plans to distribute a significant amount of recovered cryptocurrency in the following way:

• 142,000 BTC: This sum, valued at around $8.8 billion based on the current Bitcoin price of $62,000 per BTC, represents part of the Bitcoin lost in the 2014 hack.
• 143,000 BCH: With the current price of Bitcoin Cash at approximately $650 per BCH, this amount is valued at roughly $400 million.

The precise timeline for the distribution has not been revealed, but creditors will receive their shares in proportion to their verified claims. According to the notice, repayments will be processed through cryptocurrency exchanges that have finalized the required exchange and confirmation procedures with the Rehabilitation Trustee.

Crypto Market on Edge: Mt. Gox to Inject Billions, Bitcoin Fate Uncertain

The impending Mt. Gox distribution could have varied effects on the cryptocurrency market. The release of a significant amount of Bitcoin Cash (BCH) might increase supply and exert downward pressure on its price. However, this could be counterbalanced by creditors who might seek to sell or trade their BCH, potentially driving up demand.

For Bitcoin (BTC), the impact is expected to be less pronounced. The amount being distributed is a small fraction of the total circulating supply, so its direct effect on the price is likely to be minimal. Nevertheless, the overall sentiment surrounding Mt. Gox’s asset return could temporarily influence market attitudes toward Bitcoin.

Currently, as news of the forthcoming repayments spreads, Bitcoin is trading at $62,100 . However, it has seen a 2.7% drop in the past 24 hours and a 5.3% decline over the past week.

Following the public announcement of the repayments, the crypto community began speculating  whether Bitcoin has reached its bottom, drawing on historical patterns for insight.

MtGox FUD traditionally marks the final dip before the next leg up.

The last time it happened was on January 23rd marking the bottom, followed by a new $BTC  all-time high. pic.twitter.com/He8yxKeK4Y 

— DeFi Warhol (@Defi_Warhol) June 24, 2024 

 

Historically, fear, uncertainty, and doubt (FUD) surrounding Mt. Gox often signals the final dip before Bitcoin starts to rise again. The most recent instance was on January 23rd, which marked the bottom before Bitcoin surged to a new all-time high.

Analyzing the BTC/USD chart reveals numerous double bottom patterns, a bullish reversal indicator suggesting potential upward price movements after each identified bottom.

Bitcoin is currently trading at approximately $61,100 at the time of writing. Considering the dense concentration of double bottoms and the oversold stochastic reading, there is a technical basis for anticipating a short-term rebound.

If the double bottom patterns hold, Bitcoin could find support around the recent lows of around $60,000. Given the oversold condition, a minor rebound towards the $62,000 – $63,000 range is plausible. In terms of resistance levels, near-term resistance is around $64,000, where previous consolidation occurred.

Skepticism Meets Market Concerns Amid Bitcoin Sell-Off Fears

Still, the crypto community is skeptical. This is not the first time Mt.Gox has announced paying back its creditors. According to  the X user igloobamboo, similar announcements were given in 2017, 2021, 2022 and 2023.

😂
"This time will be different" pic.twitter.com/Jd9N2hTsA2 

— Igloobamboo (@igloobamboo) June 24, 2024 

However, a recent transfer of 137,890 BTC (worth $9.4 billion) from a wallet, believed to be destined for creditors, has sparked concern in the market. Experts are divided on the implications, with many fearing increased selling pressure could lead to a drop in Bitcoin’s price.

Mark Karpeles, the former CEO of Mt. Gox, then clarified  that the recent transfer of Bitcoins from the exchange’s wallet is not a sell-off but part of a larger plan to distribute funds to creditors.

As far as I know everything is fine with MtGox. The trustee is moving coins to a different wallet in preparation of the distribution that will likely happen this year, there is no imminent sale of bitcoins happening.

— Mark Karpelès (@MagicalTux) May 28, 2024 

Analyst James Van Straten also highlighted  the impact of the Mt. Gox repayment event on the market. According to his insights shared on X, Grayscale Bitcoin Trust and Long Term Holders have collectively sold approximately 1 million BTC over the past five months.

Despite this substantial sell-off, the market has demonstrated remarkable resilience in absorbing these transactions. For context, the BTC to be repaid by Mt. Gox to its creditors represents only 10% of the total sold.

Recent market dynamics, including a Bitcoin rally that saw prices reach an all-time high earlier this year, have incentivized some Long Term Holders to sell, reducing their overall supply. Van Straten suggested  that this recent decrease in Long Term Holder holdings significantly outweighs the BTC released through Mt. Gox repayments.

About the Author

Teuta Franjkovic

Teuta is a seasoned writer and editor with more than 15 years of experience. She has expertise in covering macroeconomics and technology as well as the cryptocurrency and blockchain industries. She has worked for several publications as a journalist and editor, including Forbes, Bloomberg, CoinTelegraph, Coin Rivet, CoinSpeaker, VRWorld and Arcane Bear. Teuta began her professional career in 2005, working as a lifestyle writer at Cosmopolitan in Croatia. From there, she branched out to several other publications, covering mainly business and the economy. She then turned her attention to the world of cryptocurrency and blockchain, believing that crypto is among the most important inventions in the history of humanity. Her involvement in fintech began in 2014 and she has since lent her expertise in writing, editing and gathering information about the world of crypto, blockchain, NFTs and Web3. An all-round news hound, mentor, editor, and writer, Teuta enjoys teamwork and good communication. She holds a WSET2 diploma and has a thing for chablis, punkrock music and shoes. She also holds a double MA in Political science and Entrepreneurship.

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