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Major Bitcoin Sell-Off Coming as Mt. Gox $9 Billion Redemption Begins Today
Bitcoin recently saw a 4% increase, bringing its trading price to around $63,350 and recovering some of its losses from June. Despite this positive movement, sentiment towards Bitcoin and cryptocurrency markets in general remain cautious.
Investors are worried about a major liquidation event as the now-defunct Mt. Gox exchange begins distributing stolen tokens this week.
Mt. Gox Begins $9 Billion Refund
Mt. Gox, once a major cryptocurrency exchange that went bust a decade ago following a significant hack, start distributing refunds in Bitcoin to creditors this week. Creditors, who have waited years for compensation, are set to receive around $9 billion in Bitcoin, according to today’s prices.
In 2011, Mt.Gox lost around 950,000 bitcoins in a hacker attack, a huge amount considering Bitcoin’s ATH value has reached $32 for BTC. About 140,000 of those bitcoins were later recovered and are now worth about $9 billion, reflecting a huge increase in value.
Mt. Gox creditors will receive 142,000 bitcoins from July to October, worth about $9 billion at current prices. Although there is an October deadline, JPMorgan analysts believe the bulk of the repayments will occur in July.
Major Sale Coming Soon
JPMorgan analysts suggest that some Mt. Gox creditors may sell some of their Bitcoin claims this month, potentially putting initial pressure on cryptocurrency markets.
This expectation is supported by a slight decline in JPMorgan’s Bitcoin futures position indicator based on CME futures, which indicates that it has been mostly retail clients, not institutional investors, who have been selling their cryptocurrency holdings recently.
However, analysts expect a market recovery starting in August, partly due to upcoming cash refunds from another bankrupt cryptocurrency exchange, FTX.
Online FTX Refunds
FTX, another bankrupt cryptocurrency exchange, will also be repay your creditors in the coming months, but these will be in cash. Estimated at between $14 billion and $16 billion, these refunds are expected shortly after the final approval of FTX’s liquidation plan on October 7.
These funds could potentially support cryptocurrency markets, as native cryptocurrency creditors could reinvest their repayments into digital assets.