Mt.Gox once again caused the currency price to collapse. A compensation plan of up to 9 billion US dollars is about to begin, but the selling pressure may be overestimated.

Mt.Gox (Mentougou) crashed the market again. On June 24, the Mt. Gox trustee announced that it would begin the repayment of BTC and BCH in July this year, involving crypto assets worth up to US$9 billion. Affected by this, the encryption market staged a "diving" market, and Bitcoin once fell below the $60,000 mark.

The repayment of BTC and BCH will be launched in July, and the custodian will decide the order of compensation.

Official documents show that the Mt.Gox trustee is ready to initiate repayment procedures tocryptoexchanges (including Kraken, Bitstamp and BitGo) in accordance with the requirements of the recovery plan. At present, it has completed the confirmation and exchange of required information with relevant exchanges to ensure the safety and compliance of repayments.

It is reported that Mt.Gox has a total of 127,000 creditors (Japanese users account for less than 1%), and it needs to repay creditors 142,000 BTC (currently worth about 8.58 billion US dollars) and 143,000 BCH (worth about 53.311 million US dollars) Dollar).

At the end of last month, Mt.Gox began to prepare for repayment before the creditorsrepayment deadline on October 31st. Its wallet experienced the first change in 5 years, and its Bitcoin holdings have now been evenly divided into 3 new addresses, each containing 47,230 BTC. But Mt. Gox does not pay out all assets at once. According to previous reports by PANews, Mt. Gox’s repayment plan for creditorsincludes basic repayment and proportional repayment. The basic repayment part allows each creditorto claim the first 200,000 yen to be paid in Japanese yen, while the proportional repayment provides two flexible options for creditors, namely "early lump sum repayment" or "interim repayment and Final repayment”. Among them, the early one-time repayment compensation method can only allow creditorsto obtain part of the compensation. For the part exceeding 200,000 yen, creditorscan choose a mixed method of BTC, BCH and Japanese yen or pay the entire amount in legal currency. And Mt.Gox has set the deadline for basic repayment, early one-time repayment and mid-term repayment as October 31, 2024, but if creditorswant to obtain a higher proportion of compensation, they may have to wait five to nine days year time. At the end of 2023, many Mt.Gox creditorshave stated that they have received the first compensation payment denominated in Japanese yen. This upcoming compensation plan is the first time that Mt.Gox will repay in the form of BTC and BCH. It should be noted that Mt.Gox also pointed out that the specific repayment will be based on the order in which each exchange has completed the exchange and confirmation of the required information, which also means that the time for creditorsto receive compensation is not the same. According to previous disclosures, BitGo takes up to 20 days for payment, and Kraken and Bitstamp's payment procedures may take 90 days. It is expected that 95,000 Bitcoins will be paid out in advance, and large creditorsare optimistic about the market outlook. For the crypto market, which is already experiencing tight liquidity, Mt. Gox’s upcoming compensation plan is undoubtedly a blow, according to Bloomberg senior ETF analyst Eric Balchunas The commentary stated that if all Mt. Gox Bitcoins enter the market, it will be equivalent to more than half of the Bitcoin ETF inflows being offset. Amid the panic caused by the huge selling pressure, the price of Bitcoin once fell below the $60,000 mark, hitting a new low since May. CoinGlass data shows that in the past 24 hours, the amount of liquidated positions across the entire network reached US$357 million, of which US$175 million was liquidated in Bitcoin. But according to multiple institutions and large creditors, the selling pressure brought by Mt. Gox appears to be less than market expectations.

For example, Alex Thorn, head of research at Galaxy Digital, said on the X platform today that the number of tokens distributed by Mt. Gox is expected to be less than market expectations. Specifically, Mt. Gox lost approximately 940,000 Bitcoins, but successfully recovered 141,868 Bitcoins (worth approximately $63.9 million at the time), which are now worth up to $9 billion. While the recovery rate is only 15%, what it means to creditors is that their investment has grown 140 times in dollar value. In order to get paid as quickly as possible (i.e., an "early" payment), creditors need to accept a loss of approximately 10%. It is estimated that about 95,000 Bitcoins were used for early payments, of which about 20,000 Bitcoins belong to the claims fund, 10,000 Bitcoins belong to the Bitcoinica bankruptcy case, and the remaining 65,000 Bitcoins belong to individual creditors (this number is much lower than 141,868 Bitcoins often reported in the media). In fact, according to previous creditor claims data compiled by Mt. Gox bankruptcy trustee Nobuaki Kobayashi, there are 226 claimants who collectively own more than 50% of Mt. Gox’s claims, and these investors will receive 84,650 Bitcoins. "The potential selling pressure on Bitcoin caused by the Mt. Gox incident may be exaggerated. Creditors desperate for funds have had a decade to sell their claims, and those who still retain their claims will certainly not be in a hurry to sell Bitcoin." So said Alistair Milne, chief investment officer of Altana Digital Currency Fund. According to Bloomberg, large creditors and long-term market participants do not believe that the price of Bitcoin will suffer a lasting blow. Many plan to either keep the tokens or sell them gradually, betting that prices will continue to rise. For example, Blockstream Corp. CEO Adam Back, who plans to retain creditors of Bitcoin distributions, said it would be a strange time to sell Bitcoin at the start of a bull market. Brian Dixon, CEO of OfftheChain Capital, another large creditor that has acquired Mt. Gox claims for many years, said that he would only plan to sell his Bitcoin holdings when he finds better investment opportunities. “The Bitcoin market has matured a lot. , creditors have to ask themselves whether they need the money for something, or whether Bitcoin is better used as a long-term store of value, because Bitcoin has been the best performing asset over the past 15 years, so I don't think the price of Bitcoin is "It will be hit in the long term, but there may be some volatility in the short term." Alex Thorn also believes that Bitcoin faces less selling pressure because individual creditors are obviously biased towards long-term Bitcoin holders and are early adopters who are proficient in technology. By. “For years, they have resisted attractive offers from claims funds, indicating that they would prefer to recover their Bitcoin rather than USD payments. Given the capital gains implications, even if it is just a 15% physical recovery, claim holders since There have also been huge gains on recovered Bitcoins since the bankruptcy, but if only 10% of the 65,000 Bitcoins were sold, 6,500 Bitcoins would have flowed into the market, which would likely have passed through the market. The transaction proceeds. The creditor will receive these Bitcoins and may deposit them into an account with Kraken, Bitstamp, or Bitgo, with most individuals likely choosing to deposit directly into the trading account. Regarding the claims funds, we have spoken to some of these funds. Understand that they are primarily made up of high-net-worth Bitcoin holders looking to buy Bitcoin at a discount, rather than credit funds focused on arbitrage trading. While some LPs may sell Bitcoin, overall these funds are not primarily focused on it. Consisting of traders seeking arbitrage. “In contrast, BCH is likely to suffer price pressure and underperform in the upcoming distribution. Alex Thorn believes that, firstly, no creditor has purchased BCH initially; secondly, the liquidity of BCH is much lower than that of BTC, especially on Kraken and Bitstamp, the two exchanges where creditors will receive the token. As a result, BCH will perform worse relative to BTC once these tokens are distributed, as creditors are more likely to sell BCH in a less liquid market. For example, Thomas Braziel, a partner at 507 Capital who has been acquiring Mt. Gox bankruptcy claims since 2015, said that he may sell his BCH, but plans to continue to hold Bitcoin in the hope of continued appreciation, and expects most creditors to follow suit. Judging from the decentralized compensation methods, the distribution of compensation in Bitcoin, and the statements of large creditors, although Mt. Gox may put some pressure on the market, its selling pressure may be overestimated by the market.

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