The Bitcoin repayments from the defunct Mt. Gox exchange are expected to be largely sold off, potentially adding significant downward pressure on Bitcoin’s price.
Financial analyst Jacob King predicts this move could push Bitcoin back into bear market territory, as many creditors are likely to sell their repayments. On-chain activities suggest that some debtors have already begun selling their Bitcoin, according to King.
In a message published on July 4 on X (formerly Twitter), he expressed this worry, writing, “No Bitcoiner will say this out loud, but the majority of the $8.2 billion in $BTC that is set to be distributed back to ex-clients are going to be sold off.”
This prediction came after, Mt. Gox had begun repaying its debts in Bitcoin (BTC) and Bitcoin Cash (BCH), potentially injecting $8.2 billion worth of selling pressure into the market.
The news from Mt. Gox comes at a moment when the price of Bitcoin has been declining, down around 18% in the second quarter of 2024 while trading above $60,000. As per the CoinMarketCap data, in the twenty-four hours before July 5, the price fell 2.94% to $55,519.
Nonetheless, the analyst believes that the market selling by Mt. Gox’s creditors may force Bitcoin back into bear market territory. He said, “I understand this is controversial, but based on the current low demand volume, this will easily send BTC back into a harsh bear market.”
The repayments are viewed as a good step forward for the sector and the former users of Mt. Gox, even with the gloomy forecast.
Former Mt. Gox CEO Mark Karpelès posted, “Mt. Gox customers have finally started receiving Bitcoins! After over 10 years I wasn’t sure anymore if it’d finally happen, but here we are finally!! This has been a long journey and I’m happy to see we’re finally getting there, only a bit more.”
Over $9.4 billion in Bitcoin is owed to around 127,000 Mt. Gox creditors, who have waited over 10 years. Given Bitcoin’s 8,500% increase in value, most creditors will likely sell to lock in profits.
“Imagine billions worth of Bitcoin all being dumped gradually over the next several weeks.,” King said. “There is no way to spin this to be bullish, or news that could offset this.”
Also Read: Bitcoin Dips Below $60K: Whales and Mt. Gox Trigger Sharp Sell-Off
