Mt.Gox has announced the start of payments. What awaits the cryptocurrency market?

The trustee of the Mt.Gox exchange, which went bankrupt in 2014, has announced plans to start paying compensation in Bitcoin, Bitcoin Cash and cash in early July.

The decision It was made after the preparatory process, including providing technical support, complying with each country’s rules, and coordinating transfers with each cryptocurrency exchange, has been completed.

Payments will begin based on the order of arrival at the platforms that have confirmed the requested information.

“We have taken the time to ensure safe and reliable reimbursement to creditors, including technical remedies for safe reimbursements, compliance with financial regulations in each country, and discussion of reimbursement agreements with cryptocurrency exchanges.”

Debtors of Mt. Gox

The market reacted nervously to the publication of the news. Bitcoin (BTC) fell below the $62,000 level. The decrease in the value of BTC led to a decline in the prices of other cryptocurrencies from the TOP 10 by market capitalization.

Mt. Gox Failure

Mt. Gox was one of the largest cryptocurrency exchanges in the world, operating from 2010 until it filed for bankruptcy in 2014 after hacker attacks. At its peak, Mt. Gox accounted for about 70% of the total Bitcoin trading volume. In a 2014 cyber attack, 850,000 BTC were stolen. Their current value is over 57 billion dollars.

The process of settling payments to the bankrupt Mt. Gox exchange began in June 2018. In 2021, a court approved a compensation plan drafted by the company’s bankruptcy trustee.

In December 2020, a plan to pay creditors in fiat currency, Bitcoin and Bitcoin Cash was introduced (BCH). The details of the plan were made public in January 2021 and received court approval in February for a subsequent vote. The compensation plan was supported by about 83% of the exchange’s users.

The exchange’s failure led to a seven-and-a-half-year legal battle before a plan was put in place to refund affected users in 2021. Since not all of the stolen coins were recovered, customers will only be compensated for a portion of the original amount: 142,000 BTC, 143,000 BCH and 69 billion Japanese yen.

As of December 2023, Mt. Gox customers reported return the money ten years after the collapse. Amid posts on social networks by anonymous users about receiving funds, the Bitcoin rate fell by 4.5%.

At the end of May, the Bitcoin exchange rate fell to $67,500 following news of the move of about $3 billion in Mt. Gox assets to pay customers for the bankrupt exchange. Market participants fear that the exchange’s clients, having received billions of dollars in compensation, will begin to sell them, influencing the market.

Payment of $9 billion in Bitcoin

Bitcoin plunged 3% after the operator of the Mt. Gox exchange, which went bust in 2014, announced plans to begin paying compensation in early July. The leading cryptocurrency’s price fell below $58,000, recovering above the $61,000 level at the time of writing.

Source: CoinMarketCap

Despite concerns about Mt. Gox Bitcoin, there may be broader reasons for volatility in the cryptocurrency market. News of the distribution of bitcoin to creditors comes amid an outflow of investments from bitcoin-traded funds. Capital losses from regulated cryptocurrency funds topped $500 million for a second week. This is the highest figure in two weeks since the adoption of spot Bitcoin ETF in the United States

What market participants are saying

Second Coin shares Chief Analyst James Butterfill said the movement of funds out of funds at a similar pace indicates the beginning of a real correction.

Caroline Mauron, co-founder of digital asset derivatives liquidity provider Orbit Markets, agreed with his opinion. He believes that bearish sentiment is spreading and that the market is having difficulty digesting large sell orders.

Others see this market behavior as a short-term correction at the beginning of a bull market. Blockstream boss Adam Back, he was wondering because the creditors have already waited ten years to be compensated.

“It would be a strange time to sell at the beginning of a bull market.”

Adam Back, CEO of Blockstream Corp.

In May, Galaxy Digital also valued the share of coins returned by the platform trustee, whose owners preferred to receive an advance payment in kind at a discounted price, was 75%.

While the market may assume that almost all of the 141,868 BTC will enter circulation this year, analysts believe the amount will be significantly less. It is expected that 64,697 BTC will go to individual creditors and another 30,000 BTC to claim funds and participants in a separate bankruptcy.

Galaxy Research Lead Alex Thorn clarified that 20,000 lenders from a pool of nearly 65,000 BTC are early adopters of digital gold who have historically held it (11% of supply hasn’t moved for more than five years)

The expert notes that most of this category bought Bitcoin at $451 or less, and have remained holders despite numerous bear markets over the course of a decade.

What will happen to Bitcoin in July?

According to Mark Cullen, Bitcoin will continue its decline in July. He believes that the positive momentum of BTC could be followed by a fall to new local lows. The analyst does not rule out a drop of Bitcoin to $57,000 in early July. At the designated level, according to his observations, there is a pool of liquidity that can act as a magnet for the cryptocurrency rate.

Trader Doctor Profit agreed with the prediction, implying a drop in Bitcoin to $57,000. Unlike Mark Cullen, he is confident that BTC is already close to reaching the local low, which will be followed by an update to the absolute high.

The trader is sure that the current withdrawal should be used to buy bitcoin at a low cost.

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