As now-defunct cryptocurrency exchange Mt.Gox prepares to distribute around $9 billion worth of Bitcoin, some investors are worried about the potential impact on prices. However, industry experts and major creditors believe BTC’s long-term bullish outlook will outweigh any short-term volatility.
With the approval of US spot Bitcoin Exchange Trade Funds (ETFs), many market experts predict that the market will absorb the newly available tokens.
Bitcoin optimism among market participants
How reported via our sister website Bitcoinist, Japanese Mt.Gox trustee Nobuaki Kobayashi recently announced plans to begin distributing Bitcoin and Bitcoin Cash to creditors.
This process is expected to begin soon, with most applicants receiving their tokens by the end of October. However, concerns have been raised about the impact of this large-scale distribution on the price of Bitcoin.
According to According to Bloomberg, significant creditors and long-time market participants remain confident in Bitcoin’s resilience despite concerns. Many people intend to hold on to the distributed coins, expecting prices to continue to rise.
Adam Back, CEO of blockchain technology company Blockstream and a creditor himself, emphasizes the “illogicality” of selling at the beginning of a potential bull market. The comeback suggests that continuing to wait, after a decade of waiting, could yield even greater gains.
According to the company’s CEO Brian Dixon, other creditors such as Off the Chain Capital only plan to sell Bitcoin when “better investment opportunities” emerge, citing Bitcoin’s historical performance as the best-performing asset in recent years.
Dixon further highlights the significant maturation of the Bitcoin market since the bankruptcy of Mt.Gox. He argues that the potential distribution impact, while significant in volume terms, is unlikely to have a lasting impact on prices.
Cosmo Jiang, portfolio manager at Pantera Capital, notes that while the amount is significant, the distribution will occur over a longer period of time, making it less feasible in terms of market impact. With a daily Bitcoin turnover of approximately $26.6 billion, the distributed tokens they are expected to be absorbed without major disruption.
Selling BCH in the Mt.Gox distribution?
Creditors do not provide for simultaneous transfer of tokens to all creditors. Instead, they expect the custodian to distribute the coins in tranches, potentially prioritizing previously submitted claims. This approach can alleviate any immediate market pressures.
Moreover, Galaxy Research estimates that credit funds holding approximately 20,000 BTC are unlikely to engage in significant sales. Instead, they are expected to distribute Bitcoin to their own narrow partners (LP) in nature.
While BTC is expected to survive distribution without major consequences, Bitcoin Cash (BCH) may come under more pressure due to less ideological commitment from holders.
Alex Thorn, head of research at Galaxy, suggests that individual creditors owe most of the tokens to be distributed this year and will likely be the main source of sales, with some choosing to sell their Bitcoin Cash.
Overall, as Mt.Gox prepares to distribute billions of dollars worth of BTC, industry experts and major creditors remain positive, citing the maturity of the Bitcoin market, the potential for further price growth, and the availability of newly approved ETFs.
One sec short-term volatility is possible, most stakeholders believe that Bitcoin’s long-term prospects will outweigh any immediate impact on the market.
At press time, the largest cryptocurrency on the market is trading at $67,900, representing a price decline of 1.3% over the past 24 hours.
Featured image from Shutterstock, chart from TradingView.com
