Will The Mt. Gox Bitcoin Dump Affect the Crypto Market? Here’s What the Expert Has to Say

The potential effects of the impending Mt.Gox bankruptcy payments on the Bitcoin (BTC) price seem to be weighing heavily on the crypto space. 

In 2014, an attacker struck the now-defunct Mt. Gox, stealing 850,000 Bitcoin worth $500 million at the time.

In July 2022, a trustee from the shuttered exchange revealed the firm’s intentions to make payments to its former users in the near future in accordance with its bankruptcy rehabilitation plan.

Following this, concerns of BTC flooding the cryptocurrency market arose. 

However, there might be no reason to panic. The host of the pseudonymous YouTube program, Coin Bureau, claims that the repayments will not be having a significant effect on the price of Bitcoin. He added: 

“Many people are concerned that this may lead to significant sell pressure, which would inevitably cause cryptocurrency values to decline. Currently, I personally don’t think this is a bit of a problem, or at least I’m not very concerned about it.”

Here’s why this sell-off is unlikely to impact the BTC price: 

• The host was fairly confident about the fact that a significant portion of Bitcoin was purchased by institutions, whales, and other high-net-worth investors for likely cents on the dollar, as it was a long time ago. Therefore, when that BTC is finally unlocked, those other institutions would have already acquired it.
• Additionally, since Bitcoin is so much below its all-time high, the analyst also thinks that most holders will decide to keep their BTC, as it has the potential to surge later on. The selling pressure is unlikely to be alarming. 

Massive Sell-Off Soon?

However, despite these facts, it would be unwise to consider the situation from both aspects. Mt.Gox clients could potentially trigger a sell-off, which would bring about a very bearish scenario for Bitcoin. One can also think back to the Luna Foundation Guard which liquidated about 80,000 BTC when LUNA collapsed. In light of the fact that Mt. Gox lost 850,000 BTC due to a hack, a creditor dump could be disastrous for the space. 

What would be the worst-case scenario? 

In order to prepare for the worst, it’s important to understand what could become of the situation. 

First and foremost, all creditors would have to decide whether to accept the early, lump-sum payment, which will probably be made in the upcoming months (as opposed to, potentially, years).

Then, everyone would have to simultaneously dump all of their BTC onto the exchanges. This would entail that everyone would have to choose to receive their rewards in BTC, BCH, or cash and coordinate to dump all of that Bitcoin at once.

Alternatively, everyone could choose to receive their payouts in a combination of BTC, BCH, and cash- which is unlikely. 

Therefore, a balanced conclusion of the situation is that there will be an influx of Bitcoins in the market for sure. The year has already been chaotic and troubling for the space, and such disturbances could lead to a supply shock. However, it’s important to remember the points laid out by Coin Bureau’s host and it is possible that this event might not cause major fluctuations in the BTC price