Bitcoin and Alt Coin Hodlers Hold Their Breath as 140,000 BTC from Mt. Gox Settlement Flow into the Market

The crypto world continues to weather a potentially seismic event as Mt. Gox, the infamous Japan-based Bitcoin exchange that collapsed in 2014, has distributed approximately 140,000 Bitcoin (BTC) to its creditors. This long-awaited resolution to one of crypto’s most unfortunate events has led to intense speculation about the price of Bitcoin and its potential impact on the broader cryptocurrency market.

The distribution, which began about two weeks ago, marks the culmination of a decade-long legal battle. According to recent media reports, almost half of the total 141,686 BTC has been redistributed to creditors, with the remaining coins expected to be distributed in the same manner in the coming weeks. This influx of Bitcoin, worth over $9 billion at current prices, represents a significant injection of liquidity into the market.

Why are many Bitcoin users worried?

You’d think that such a massive digital currency crash would cause the crypto asset’s price to plummet as long-suffering investors look to cash in on Bitcoin’s estimated 8,500% rise in value since the Mt. Gox exchange crash.

Ironically, with over 41% of Bitcoin in issue having been distributed to creditors, on-chain trading data according to Glassnode shows that volume and price typically move in the $66,000 to $68,000 range throughout the initial distribution phase. This stability suggests that the feared sell-off may not occur as conventional wisdom expects.

One possible contributing factor noted in the Glassnode data was that many of Mt. Gox’s creditors chose to receive their settlement funds in Bitcoin rather than fiat currency. Such a decision is a novelty under Japanese bankruptcy law, and these creditors intended to remain Bitcoin asset holders, the report noted.

Bitcoin’s remarkable return capabilities

“While selling pressure is expected in the short term, this could be good news for the broader market in the medium to long term, as the ‘Mt. Gox Bitcoin’ fears finally fade from the market,” said Andrei Grachev, Managing Partner at DWF Labs.

Grachev said he drew parallels with the German government’s recent sale of 50,000 BTC, which was quickly absorbed without causing a prolonged market decline.

Additionally, current market dynamics suggest a broader trend toward holding Bitcoin for the long term. According to Glassnode data summarized in the chart below, over 65.8% of Bitcoin’s supply has been dormant for over a year, while 54% has been dormant for over two years. This “HODLing,” as it’s known in crypto circles, could help cushion the impact of any sell-offs from the Mt. Gox distribution.

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Bitcoin ETFs could be buyers

Another factor that could temper the fall in Bitcoin’s price could be institutional investors looking to pick up loose assets. “The top Bitcoin ETFs have recently purchased large amounts of the asset and may be eager to add even more to their assets under management,” Grachev said.

With Bitcoin ETFs currently managing more than $60 billion in blockchain assets, potential exits from Mt. Gox could present fund managers with an attractive opportunity to boost their Bitcoin holdings at a potential bargain.

It’s also important to remember that the cryptocurrency market is affected by geopolitical factors beyond just Mt. Gox. In particular, Grachev highlights the upcoming US presidential election as a key factor that is likely to shape Bitcoin’s price action and the broader crypto market in the long term.

Impact of Mt. Gox deal on altcoins

While the immediate impact of the Mt. Gox distribution for BTC may not seem as volatile as many fear, no one knows how it will play out for the broader crypto space. One of the positives for altcoin holders is the gradual distribution method the courts have ordered for the Gox payout. The gradual settlement appears to give the market time to absorb the supply more smoothly without major sell-offs.

In fact, once the Mt. Gox payout is over, it could serve as a growth driver for the crypto space by lifting the dark cloud. “We could see a similar outcome when Mt. Gox distributes its assets to creditors, which could likely lead to Bitcoin eventually breaking the $100,000 barrier and the crypto market finally testing all-time highs,” he predicts.

Mt. Gox is a testament to investor perseverance and Bitcoin resilience

Until all Gox coins are cleared, all eyes will continue to be on Bitcoin’s price action and overall market sentiment. While there is always short-term volatility in the crypto space, Bitcoin’s ability to recover from the recent German sell-off and Gox payouts is remarkable.

For OG Bitcoiners, the Mt. Gox distribution is more than just a potential market catalyst. It’s the closing of one of crypto’s darkest chapters at a time when Bitcoin’s future is at its most vulnerable and thousands of investors are left discouraged and disillusioned. This deal is a true testament to their tenacity and determination against all odds. And their unyielding belief in the strength and resilience of arguably the hardest asset on the planet.