In recent hours, several Mt. Gox wallets were involved in transactions ahead of the pending repayments of $9 billion worth of Bitcoin (BTC) and Bitcoin Cash (BCH). These transactions were flagged by Arkham Intelligence, which identified activity in three wallets associated with the now-defunct exchange. The Mt. Gox “Doomsday” is approaching this month and could possibly lead to a heightened Bitcoin price crash as BTC extended to $57,000 today.
Mt. Gox Activates Wallets In Preparation For Repayment
The largest of the latest transactions involved a mere $24 worth of Bitcoin. Historically, significant movements of Mt. Gox funds have involved consolidations into a few main wallets. In this case, a wallet that once held $24 of Bitcoin as an intermediary forwarded the small amount to another wallet. This wallet then sent the funds to Bitbank’s hot wallet, according to Arkham Intelligence data.
Moreover, the remainder of the Bitcoin was transferred to a new wallet. For context, Bitbank is among the crypto exchanges designated to facilitate Mt. Gox repayments. Rather than being sent directly to Bitcoin holders, the funds will be distributed to five exchanges. These include Bitstamp, Bitstamp, Bitbank, SBI VC Trade, and Bitgo.
Moreover, these exchanges have assured customers that the funds will be accessible within up to 90 days from receipt. However, the nature of these small transactions raises questions about whether they serve as tests for larger transfers. The trustee previously indicated that repayments would begin in early July. However, the exact dates for the fund repayments to exchanges remain undisclosed
The anticipation of these repayments has significantly impacted the cryptocurrency market. Over the past month, Bitcoin’s price has plunged by over $12,000. At press time, the Bitcoin price was $57,675, marking a 4.19% drop in the last 24 hours.
Further accelerating the market downturn, the German government has offloaded another 1,300 Bitcoin to major crypto exchanges, totaling nearly $76 million. This action led to Bitcoin’s price dipping below $58,000 shortly after the liquidation. Additionally, the government moved 1,700 Bitcoin worth $98.76 million to an unknown wallet, raising speculation about an imminent selloff.
Also Read: Breaking: German Govt Dumps Another 1300 Bitcoin To Coinbase, Kraken & Bitstamp
What’s Next For BTC Price?
The impending Mt. Gox repayments, amounting to $9 billion, represent approximately 0.7% of the 19.7 million Bitcoin currently in circulation. This significant stake heightens fears of selloffs by creditors eager to realize their profits, given that Bitcoin was priced around $600 when Mt. Gox collapsed. Today, creditors stand to gain almost 100 times their initial investment.
James Butterfill, CoinShares’ Head of Research, expressed concern over the market impact of this substantial Bitcoin release. He remarked, “With the announcement that the Trust will begin selling in July, investors are understandably worried,” according to a CNBC report. Moreover, Butterfill underscored that this Bitcoin reserve release has long been a concern for bullish BTC investors.
Similarly, JPMorgan analysts have weighed in on the potential impact of Mt. Gox creditors liquidating their holdings. They predict that the selloff could exert short-term pressure on Bitcoin prices. In a recent research note, JPMorgan analysts stated, “Assuming most of the liquidations by Mt. Gox creditors take place in July, this creates a trajectory where crypto prices come under further pressure in July, but start rebounding from August onwards.”
Furthermore, the Bitcoin long liquidations hit $77.67 million amid German government’s offloading and anticipated Mt. Gox payments. This hints at an expedited Bitcoin crash. In addition, a point to note is that BTC was worth only $600 when Mt. Gox collapsed in 2014, leaving creditors with 100x profits. Hence, they could realize thes profits immediately after the payout, which could cause a massive BTC price correction.
Also Read: Crypto Market Crash: Why Bitcoin And Altcoins Are Falling
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
