Mt. Gox Redemption Fears ‘Overblown’ Say Traders as $10B BTC Holdings Draw Concerns

As an analyst with extensive experience in the cryptocurrency market, I believe that the selling pressure from Mt. Gox’s repayments might be less severe than anticipated, potentially easing concerns about an immediate selloff. The reason being, most of the distributed Bitcoin is likely to be held by creditors due to their low-cost basis.

According to cryptocurrency traders, the selling pressure triggered by Mt. Gox’s recent announcement of repayments might be less severe than anticipated by external observers, thereby allaying fears of an immediate mass sell-off in the market.

“According to Sam Callahan, senior analyst at Swan Bitcoin, the influence of Mt. Gox distributing Bitcoins on its price may be exaggerated (in Tuesday’s email to CoinDesk). These creditors who wished to sell their Bitcoins have had over a decade to do so by selling their insolvency claims to more dedicated, long-term investors.”

He also mentioned that many creditors are expected to keep their bitcoins since the price they paid was lower than $700 per bitcoin.

In a recent report released on Monday, Galaxy Research revealed that out of the 141,000 Bitcoin set aside for distribution, approximately 65,000 Bitcoin will be allocated to individual creditors. An additional 30,000 Bitcoin are intended for claims funds and a separate bankruptcy entity.

As a researcher, I’ve come across information indicating that approximately 140,000 Bitcoins, equivalent to roughly $9 billion at current market rates, were consolidated from various cold wallets and transferred to a single address by the exchange in May. However, it’s important to note that the specific Bitcoin amounts intended for distribution remain undisclosed publicly.

The anticipated selling force caused bitcoin to plummet by over 4% on Monday, momentarily dipping it under $60,000 for the initial time since early May.