Mt. Gox has announced the start of payments. What awaits the cryptocurrency market?

The trustee of the Mt.Gox exchange, which went bankrupt in 2014, has announced plans to start paying compensation in Bitcoin, Bitcoin Cash and cash in early July.

The decision It was made after the preparatory process, including providing technical support, complying with each country’s rules and coordinating transfers with each cryptocurrency exchange, has been completed.

Payments will begin on a first-come, first-served basis, to the platforms that have confirmed the requested information.

“We have taken time to ensure safe and reliable refunds to creditors, including technical remedies for safe refunds, compliance with financial regulations in each country, and discussion of refund agreements with cryptocurrency exchanges.”

Mt. Gox Debtors

The market reacted nervously to the news release. Bitcoin (Bitcoin) fell below the $62,000 level. The decrease in the value of BTC led to a decline in the prices of other cryptocurrencies from the TOP 10 by market capitalization.

Mt.Gox failure

Mt. Gox was one of the largest cryptocurrency exchanges in the world, operating from 2010 until filing for bankruptcy in 2014 after hacker attacks. At its peak, Mt. Gox accounted for about 70% of the total Bitcoin trading volume. In a 2014 hack, 850,000 BTC was stolen. Their current value is over $57 billion.

The process to agree on payments to failed exchange Mt. Gox began in June 2018. In 2021, a court approved a compensation plan developed by the company’s trustee.

In December 2020, a plan to pay creditors in fiat currency, Bitcoin and Bitcoin Cash was introduced (BCH). The details of the plan were made public in January 2021 and received court approval in February for a subsequent vote. The compensation plan was supported by about 83% of the exchange’s users.

The exchange’s collapse led to a seven-and-a-half-year legal battle before a plan was put in place to refund affected users in 2021. Since not all of the stolen coins were recovered, customers will only be compensated for a portion of the original amount: 142,000 BTC, 143,000 BCH, and 69 billion Japanese yen.

In December 2023, Mt.Gox customers reported return the money ten years after the crash. Among the posts on social networks by anonymous users about receiving funds, the rate of Bitcoin fell by 4.5%.

In late May, Bitcoin’s rate fell to $67,500 amid news of Mt. Gox moving assets of around $3 billion, intended to pay customers for the bankrupt exchange. Market participants fear that the exchange’s clients, having received billions of dollars in compensation, will begin to sell them, which will impact the market.

$9 Billion Bitcoin Paid Out

Bitcoin fell 3% after the operator of the Mt. Gox exchange, which went bankrupt in 2014, announced plans to start paying compensation in early July. The price of the leading cryptocurrency fell below $58,000, recovering above the $61,000 level at the time of writing.

Source: CoinMarketCap

Despite concerns about Mt. Gox Bitcoin, there may be broader reasons for the cryptocurrency market volatility. The news of the distribution of bitcoin to lenders comes amid an outflow of investment from bitcoin-traded funds. Capital losses from regulated crypto funds exceeded $500 million in the second week. This is the highest figure in two weeks since spot Bitcoin adoption ETF in the United States

What market participants are saying

Second Coin Sharing Chief Analyst James Butterfill said the movement of funds out of funds at a similar pace indicates the beginning of a real correction.

Caroline Mauron, co-founder of digital asset derivatives liquidity provider Orbit Markets, agreed with his opinion. He believes that bearish sentiment is spreading and that the market is having difficulty digesting large sell orders.

Others see this market behavior as a short-term correction at the start of a bull market. Blockstream boss Adam Back He wondered because the creditors have already waited ten years for compensation.

“It would be a strange time to sell at the start of a bull market.”

Adam Back, CEO of Blockstream Corp.

In May, Galaxy Digital also valued 75% of the coins were returned by the platform’s trustee, whose owners preferred to receive an advance payment in kind at a discounted price.

While the market may believe that nearly all of the 141,868 BTC will enter circulation this year, analysts believe the amount will be significantly less. 64,697 BTC are expected to go to individual creditors and another 30,000 BTC to claim funds and participants in a separate bankruptcy.

Galaxy Research Lead Alex Thorn clarified that 20,000 lenders from a pool of nearly 65,000 BTC are early adopters of digital gold who have historically held it (11% of supply hasn’t moved for more than five years)

The expert notes that most of this category bought Bitcoin at $451 or below: they have remained holders despite several bear markets over the course of a decade.

What will happen to Bitcoin in July?

According to Mark Cullen, Bitcoin will continue its decline in July. He believes that the positive momentum of BTC could be followed by a fall to new local lows. The analyst does not rule out a drop of Bitcoin to $57,000 in early July. At the designated level, according to his observations, there is a pool of liquidity that can act as a magnet for the cryptocurrency rate.

Trader Doctor Profit agreed with the prediction, implying a drop in Bitcoin to $57,000. Unlike Mark Cullen, he is convinced that BTC is already close to reaching a local low, which will be followed by an update to the absolute high.

The trader is sure that the current decline should be used to buy bitcoin at a low cost.

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