Bitcoin
JPMorgan, CoinShares Predict Bitcoin Shake-Up From $9 Billion Mt. Gox Payout
As Mt. Gox prepares to distribute approximately $9 billion in Bitcoin to its creditors, analysts at JPMorgan and CoinShares anticipate significant implications for BTC. Mt. Gox was once the largest Bitcoin
exchange before its collapse in 2014. Now, the collapsed exchange is set to return approximately 141,000 BTC to users who lost funds during its demise.
Impact of Mt. Gox Refund on Bitcoin
Mt. Gox’s imminent payout amounts to about 0.7% of the total 19.7 million Bitcoins currently in circulation, which is a significant share. Therefore, CoinShares head of research James Butterfill expressed concern about the potential market impact of this massive Bitcoin release. He highlighted that the release of this Bitcoin reserve has been a concern for those bullish on BTC.
Furthermore, it indicates a market sensitivity to news related to such events. Butterfill noted, “With the announcement that the Trust will begin selling in July, investors are understandably concerned,” according to a report by CNBC.
John Glover, Chief Investment Officer (CIO) at Ledn, echoed these sentiments. He foresees a scenario where many creditors may opt to sell their Bitcoins to realize gains. Glover noted, “Many will clearly cash out and take advantage of the fact that having their assets trapped in the Mt. Gox bankruptcy was the best investment they ever made.”
Furthermore, his observation highlights the dramatic increase in Bitcoin’s price since the closure of Mt. Gox. The price of BTC has skyrocketed from around $600 per coin in 2014 to over $63,200 today. Previously, Bitcoin even reached a high of $73,800 in March 2024, potentially due to the launch of spot BTC ETFs in January.
Furthermore, JP Morgan Analysts have also weighed in on the potential impact of Mt. Gox creditors liquidating their bitcoin holdings. They anticipate that the liquidation could put pressure on bitcoin prices in the short term. In a recent research note, JPMorgan analysts stated, “Assuming the majority of liquidations by Mt. Gox creditors occur in July, this creates a trajectory where cryptocurrency prices come under greater pressure in July but start to recover from August onwards.”
Read too: Breaking: US Government Moves $12 Million in Ethereum, Is Bitcoin-Style Sell-Off Coming?
Gemini Effect Will Continue With Mt. Gox Refund
The anticipation of these Bitcoin sales follows a similar pattern seen with Gemini, another cryptocurrency exchange. Earlier last month, Gemini returned more than $2 billion worth of Bitcoin to users in June. This event coincided with a significant recovery in the price of Bitcoin after Gemini resumed withdrawals from its Earn lending program, which had been suspended months earlier.
JPMorgan analysts also drew parallels with this recent event. They noted that the return of Gemini funds led to negative price movements as retail clients likely took profits from Bitcoin. Furthermore, they suggested that a similar scenario could happen with Mt. Gox’s creditors.
JPMorgan analysts expected that some lenders would choose to sell their Bitcoin holdings to capitalize on the crypto’s impressive gains. Additionally, a worrying sales trend has been observed in the German and North American governments. Today, the German government transferred another 400 BTC to Coinbase, Kraken and Bitstamp.
The latest dump brings the German government’s total Bitcoin liquidation to over 2,700 BTC since June. Additionally, the US government disposed of a staggering 4,000 BTC last month. These liquidations have had a massive impact on the price of Bitcoin due to the FUD in the market.
Furthermore, just the announcement of Mount Gox refunds pushed the price of BTC to $59,000 in June. This suggests that with the actual payment, the price of Bitcoin could be ready for an even bigger drop. Furthermore, miner capitulation increased due to a massive drop in hash price, suggesting further liquidations.
Read too: Latest News: German Government Dumps 400 BTC to Major Exchanges, Wave of Transfers Continues