The head of research at Galaxy, a crypto financial services firm, is addressing concerns about the potential impact of Mt.Gox repayments on Bitcoin’s stability. Alex Thorn, in a recent interview on the Unchained Podcast YouTube channel, stated that the defunct crypto exchange is scheduled to repay creditors with approximately 142,000 BTC, equivalent to nearly $9 billion, from July to October.
The news of Mt. Gox’s upcoming BTC disbursement caused a significant stir in the crypto markets last week, leading to over $313 million in liquidations. However, Thorn believes that the worries surrounding the Mt. Gox situation may be exaggerated. His research suggests that less than half of the coins will likely be available for sale once they are issued. Furthermore, Thorn anticipates that the recipients will hold onto their BTC instead of selling it immediately.
According to Thorn, individuals who will receive their BTC in the coming months have agreed to a 10% to 11% reduction in order to participate in Mt. Gox’s early payout program. He estimates that 75% of creditors have accepted this offer, resulting in a reduced delivery of 94,600 coins.
Thorn also mentions that many people have previously sold their bankruptcy claims to funds at a discounted price. These funds have aggressively purchased claims from Mt. Gox users who did not want to wait for years to receive any funds. Approximately 20,000 BTC is believed to be held by these funds, leaving a remaining balance of 74,000 coins.
The Galaxy executive believes that the funds that acquired the bankruptcy claims are unlikely to flood the market with sell orders. Thorn explains that the entities providing liquidity to purchase the claims intend to hold onto the coins once they are released. He states, “My understanding is that they all plan to deliver in kind to their liquidity providers… These funds mainly consist of high-net-worth Bitcoiners who want to acquire Bitcoin at a discount.”
Thorn points out that the final group to receive BTC from Mt. Gox is the crypto exchange Bitcoinica, which is set to collect 10,000 BTC. However, Bitcoinica cannot sell its Bitcoin immediately due to its ongoing bankruptcy process in New Zealand.
Overall, Thorn estimates that 64,000 BTC will be distributed to the trading accounts of creditors. He believes that these entities, who are early Bitcoin adopters, are more inclined to hold onto their BTC rather than sell it upon receipt. Thorn concludes, “In general, I don’t anticipate a significant amount of selling. That’s the bottom line. Or at least, I believe that there will be much less selling than what the initial headlines suggest.”