Markets
How will the Mt. Gox Bitcoin distribution affect cryptocurrency prices? — TradingView News
As defunct cryptocurrency exchange Mt. Gox prepares to distribute around $9 billion worth of Bitcoin, some investors are concerned about the potential impact on prices. However, industry experts and major creditors believe that any short-term volatility will be offset by BTC’s long-term bullish outlook.
With the approval of Bitcoin spot exchange traded funds (ETFs) in the United States, many market experts predict that the market will absorb the newly available tokens.
Optimism about Bitcoin among market participants
As reported by our sister website, Bitcoinist, Mt. Gox’s Japanese trustee, Nobuaki Kobayashi, recently announced plans to begin distributing Bitcoin and Bitcoin Cash to creditors.
The process is expected to begin shortly and most applicants will receive their tokens by the end of October. However, concerns have arisen regarding the impact of this large-scale distribution on the price of Bitcoin.
According to Bloomberg, major creditors and longtime market participants remain confident in Bitcoin’s resilience despite the concerns. Many intend to hold on to the distributed coins, anticipating continued price appreciation.
Adam Back, CEO of blockchain technology company Blockstream and himself a creditor, points out the “illogicality” of selling at the start of a potential bull market. Back suggests that waiting any longer, after a decade-long wait, could yield even greater returns.
According to the company’s CEO Brian Dixon, other lenders, such as Off the Chain Capital, plan to sell Bitcoin only when “better investment opportunities present themselves,” recognizing Bitcoin’s historical performance as the best-performing asset in recent years .
Dixon also highlights the significant maturation of the Bitcoin market following the Mt. Gox failure. He argues that the potential impact of distribution, even if large in volume, is unlikely to have a lasting effect on prices.
Cosmo Jiang, portfolio manager at Pantera Capital, notes that while the amount is significant, the distribution will take place over an extended period, making it less viable in terms of market impact. With approximately $26.6 billion in daily Bitcoin trades, the distributed tokens are expected to be absorbed without major disruption.
BCH sales in Mt. Gox distribution?
Creditors do not expect a simultaneous distribution of tokens to all claimants. Instead, they expect the trustee to distribute the coins in tranches, potentially prioritizing previously submitted claims. This approach can mitigate any immediate market pressure.
Furthermore, Galaxy Research estimates that credit funds, which hold around 20,000 BTC, are unlikely to make significant sales. They are instead expected to distribute the Bitcoin to their limited partners (LPs) in kind.
While BTC is expected to weather the distribution without major consequences, Bitcoin Cash (BCH) may face more pressure due to its lower ideological commitment from holders.
Alex Thorn, head of research at Galaxy, suggests that individual creditors owed the majority of tokens to be distributed this year are likely to be the main source of sales, with some opting to sell their Bitcoin Cash.
In summary, as Mt.Gox prepares to deploy billions of dollars worth of BTC, industry experts and major creditors remain optimistic, citing the maturity of the Bitcoin market, the potential for continued price appreciation, and the availability of ETFs as soon as approved.
While short-term volatility is possible, most stakeholders are confident that Bitcoin’s long-term prospects will outweigh any immediate impact on the market.
As of this writing, the largest cryptocurrency on the market is trading at $67,900, with a price decline of 1.3% over the past 24 hours.
Featured image from Shutterstock, chart from TradingView.com