Mt.Gox’s $9 Billion Repayment Begins Today! How Will the Crypto Market React?

Bitcoin just clawed its way back to $63,350, a 4% jump that trims some of June’s losses. But can you really call this a comeback? Probably not; as the sentiment towards Bitcoin and the broader crypto markets remains cautious.

A looming event threatens to throw the crypto market back into turmoil. What is it, and will it sink Bitcoin or create a buying opportunity? Read on to find out.

Concerns Over Mt. Gox’s Move

Investors are apprehensive about a major liquidation event as the now-defunct exchange Mt. Gox begins distributing recovered tokens this week.

Mt. Gox, a once-prominent crypto exchange that went bankrupt a decade ago following a significant hack, will start distributing Bitcoin repayments to creditors this week. These creditors, who have waited years for compensation, are set to receive approximately $9 billion worth of Bitcoin at today’s prices

It’s been a long struggle

In 2011, Mt. Gox lost approximately 950,000 bitcoins in a hack, a staggering amount given Bitcoin’s then all-time high value of $32 per BTC. Around 140,000 of those bitcoins were later recovered and are now worth about $9 billion, reflecting a massive increase in value.

From July to October, Mt. Gox creditors will receive 142,000 bitcoins, valued at around $9 billion at current prices. Although there is an October deadline, JPMorgan analysts believe most repayments will occur in July.

Prepare for Market Pressure!

JPMorgan analysts suggest that some Mt. Gox creditors may sell part of their Bitcoin receivables this month, potentially putting initial pressure on the crypto markets.

This expectation is supported by a slight decrease in JPMorgan’s Bitcoin futures position indicator based on CME futures, indicating that mainly retail customers, not institutional investors, have been selling off crypto holdings recently.

What to Expect Next?

However, analysts expect a market recovery starting in August, partly due to upcoming cash repayments from another bankrupt crypto exchange, FTX.

FTX, another bankrupt crypto exchange, will also be repaying its creditors in the coming months, but these repayments will be in cash. Estimated between $14 billion and $16 billion, these repayments are expected shortly after the final approval of FTX’s wind-down plan on October 7.

These funds could potentially support the crypto markets as crypto-native creditors may reinvest their repayments into digital assets.

Will Mt. Gox’s repayment cause a crypto fire sale, or is this a buying opportunity? Share your thoughts.