Will Bitcoin’s price bear the brunt of Mt. Gox’s repayment plan?




The
following
is
a
guest
post
by
Nischal
Shetty,
co-founder
and
President
at
Shardeum.


Mt.
Gox
was
once
the
world’s
leading
Bitcoin
exchange
before
it
was
hacked
in
2014,
leading
to
the
loss
of
over
850,000
BTC.
After
years
of
legal
battles,
Japanese
authorities
finally
approved
a
rehabilitation
plan
in
2021,
launching
a
legal
procedure
known
as
“civil
rehabilitation,”
allowing
creditors
to
recover
some
portion
of
their
lost
funds.


The
plan
has
become
effective
as
creditors
who
lost
their
funds
are
now
allocated
a
part
of
the
remaining
ones.
Mt.
Gox’s
planned
repayments
to
creditors
might
have
played
some
role
in
a
4%
decline
in
Bitcoin’s
price
over
the
past
24
hours,
which
the
market
was
able
to
shake
off
with
an
eventual
rebound.
However,
there
is
a
concern
that
these
newly
freed
coins
will
flood
the
market,
leading
to
a
selloff
and
driving
the
price
down
further.

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In
an
official
statement, 
Mark
Karpeles,
former
CEO
of
Mt.
Gox,
confirmed
that
while
Bitcoin
sell-offs
aren’t
happening
now,
tokens
being
moved
from
Mt.Gox
to
a
new
wallet
is
part
of
the
larger
plan
to
distribute
to
creditors.
 


Understanding
Long-Term
Holders
(LTHs)
and
Short-Term
Holders
(STHs)


The
Bitcoin
market
can
be
broadly
divided
into
two
categories
based
on
investor
holding
times:
Long-Term
Holders
(LTHs)
and
Short-Term
Holders
(STHs).


  • LTHs:


    These
    investors
    have
    held
    onto
    their
    Bitcoin
    for
    over
    155
    days.
    They
    are
    generally
    considered
    more
    resolute
    and
    less
    likely
    to
    panic
    sell
    during
    market
    downturns.

  • STHs:


    These
    investors
    have
    bought
    Bitcoin
    within
    the
    past
    155
    days.
    They
    are
    typically
    more
    reactive
    to
    market
    news
    and
    events
    and
    might
    be
    quicker
    to
    sell
    in
    response
    to
    negative
    sentiment.


Historical
LTH
Selloff
vs.
Mt.
Gox
Repayments


CryptoSlate
Senior
Analyst

James
Van
Straten
shares
a
perspective
that
sheds
light
on
the
potential
of
the
Mt.
Gox
repayment
event
on
the
market.
He
shared
on
his
X
account
how
Grayscale
Bitcoin
Trust
and
Long
Term
Holders
sold
around
1M
BTC
in
the
last
five
months.


The
market
has
been
able
to
showcase
impeccable
resilience
in
absorbing
these
sell-offs.
In
comparison,
Mt.
Gox’s
repayments
to
its
creditors
would
be
1/10th
of
the
1M
BTC
sold.

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The
recent
Bitcoin
rally,
which
reached
an
all-time
high
this
year
before
the
halving,
was
strong
enough
to
incentivize
some
Long-Time
Holders
to
sell,
as
indicated
by
a
decrease
in
their
total
supply.
Van
Straten
argues
that
this
recent
LTH
selloff
would
dwarf
the
amount
of
Bitcoin
released
through
Mt.
Gox
repayments.


Data
and
Market
Analysis


According
to
on-chain
data,
research
firm
Glassnode
released
earlier
this
year
that
the
number
of
Bitcoin
addresses
holding
onto
coins
for
more
than
5
years
reached
a
new
low,
suggesting
some
long-term
investors
were
taking
profits.
The
massive
BTC
movement
has
raised
concerns
that
Mt.
Gox
creditors
might
decide
to
sell
their
recovered
coins
on
exchanges,
flooding
the
market
and
driving
down
prices.


This
fear
is
amplified
by
the
fact
that
the
average
daily
inflow
of
Bitcoin
to
exchanges
has
been
hovering
around
2016
levels,
suggesting
potentially
lower
liquidity
to
absorb
a
large
sell-off.


But
compared
to
this
larger
LTH
selloff,
the
impact
of
Mt.
Gox
repayments
might
be
less
impactful
for
the
market.
It’s
important
to
remember
that
not
all
creditors
who
receive
their
BTCs
will
immediately
sell
their
recovered
Bitcoin.
And
the
distribution
hasn’t
come
into
effect
formally
as
yet.

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Among
the
creditors,
some
might
choose
to
hold,
or
buy
more,
based
on
their
individual
investment
strategies.
While
the
immediate
market
reaction
might
be
negative
due
to
short-term
investor
jitters,
the
long-term
impact
of
Mt.
Gox
repayments
could
be
positive.
Increased
institutional
adoption
often
follows
periods
of
market
consolidation,
and
resolving
the
Mt.
Gox
saga
could
improve
investor
confidence
in
the
overall
health
of
the
Bitcoin
ecosystem.


Conclusion


The
Mt.Gox
saga
and
its
potential
impact
on
Bitcoin
price
highlight
some
loopholes
better
addressed
at
this
crucial
point
of
market
maturity.


While
short-term
volatility
is
to
be
expected,
especially
when
large
amounts
of
coins
are
moved,
market
stability
and
an
increase
in
liquidity
could
boost
investor
confidence
and
set
a
secure
tone
for
the
long-term
implications
of
Bitcoin’s
performance. 

Mentioned
in
this
article

Go to Source
Author: Nischal Shetty


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