By Nermeen Nabil 
Market analysts at K33 Research are sounding the alarm bells over the impending release of more than $9 billion worth of Bitcoin, a remnant from the defunct Mt. Gox exchange. This move, they warn, could potentially disturb the cryptocurrency market’s current balance. Researchers Anders Helseth and Vetle Lunde from K33 have highlighted recent communications sent to Mt. Gox creditors, which detail the owed amounts in both cryptocurrency and fiat, as well as the repayment schedule. From these updates, it appears that the process of Bitcoin repayment could start as early as the upcoming month.
The infamous collapse of Mt. Gox in February 2014, which was the result of multiple undetected hacks over time, left approximately 127,000 creditors in limbo, waiting for the return of their funds. According to the information released, the exchange’s outstanding debts include over $9.4 billion in Bitcoin, an additional $72 million in Bitcoin Cash, and around $445.8 million in fiat currency, which amounts to 69 billion Japanese yen. While the direct impact of these repayments on the market might not immediately translate to a sell-off, the analysts express concern over the volume of 142,000 BTC and 143,000 BCH about to be reintroduced. This potential increase in available supply, they argue, could lead to what is known as an “overhang” in the market, unsettling the current price stability.
The implications of this repayment process on Bitcoin’s price in the near term are significant, especially considering Bitcoin’s price is currently above $66,700. The market has recently been subject to volatility, influenced by various elements including geopolitical tensions in the Middle East and the impacts of the Bitcoin halving event that occurred on April 20. The reintroduction of a large volume of Bitcoin into the market could therefore exacerbate this volatility.
In preparation for these repayments, the trustees of Mt. Gox have been reaching out to the creditors since January to confirm their identities and the details of the crypto exchange accounts to be used for the repayment process. Some of these creditors have already started receiving repayments in Japanese yen, and further reports suggest additional fiat transfers were made in March. With a final repayment deadline set for October 31, 2024, for certain types of repayments, it remains unclear whether this timeline might shift given the evolving dynamics surrounding the process.
The situation unfolds as the crypto community keenly watches how these repayments will influence market dynamics, especially in terms of Bitcoin’s price and overall market sentiment. The large sum of Bitcoin and Bitcoin Cash poised for release back into the market through Mt. Gox’s creditors marks a significant moment in cryptocurrency history, potentially setting the stage for notable shifts in market behavior and investor strategies.
Nermeen Nabil Khear