How will Mt Goxs 94 billion worth of BTC affect the market

Source: Blockchain Knight
The dormancy period of Mt. Gox may not have ended yet, but a series of tokens flowing out of its wallet has already caught the market’s attention.
It is speculated that a total of 137,890 BTC worth $9.4 billion will be transferred to creditors’ wallets, with experts reacting differently to this news. Most are concerned that the selling pressure of BTC may increase, leading to a drop in BTC price.
Mt. Gox was once a leading BTC exchange in the world, but fell victim to a hacking attack in 2014, losing over 850,000 BTC.
After years of legal battles, Japanese authorities finally approved a revival plan in 2021, initiating a legal process known as “civil rehabilitation,” allowing creditors to recover some of their lost funds.
The plan is now in effect, and creditors who lost funds can now receive a portion of the remaining funds.
Mt. Gox plans to repay creditors, which may have contributed to a 4% drop in BTC price in the last 24 hours, but the market may eventually bounce back from this impact.
However, there are concerns that these newly released BTC could flood the market, leading to more selling and further price drops.
Former Mt. Gox CEO Mark Karpeles confirmed in an official statement that while BTC selling has not occurred yet, transferring tokens from Mt. Gox to a new wallet is part of a larger plan to distribute to creditors.
According to investors’ holding periods, the BTC market can be roughly divided into two categories: Long-Term Holders (LTHs) and Short-Term Holders (STHs).
– Long-Term Holders: These investors have held BTC for more than 155 days.
– Long-Term Holders: They are usually considered more resilient during market downturns and less likely to panic sell.
– Short-Term Holders: These investors have bought BTC in the past 155 days. They typically react faster to market news and events and may sell in response to negative sentiments more quickly.
CryptoSlate senior analyst James Van Straten shared a perspective revealing how Grayscale BTC Trust long-term holders have sold approximately 1 million BTC over the past five months.
The market has shown impeccable resilience in digesting these sales. In contrast, the repayment amount to Mt. Gox creditors is only 1/10 of the 1 million BTC sold.
The recent rally in BTC reached this year’s historical high before halving, which was enough to stimulate some long-term holders to sell, as evidenced by the decrease in their total supply.
Van Straten believes that recent LTH sales will dwarf Mt. Gox’s repayment in terms of the number of BTC released.
According to on-chain data, research firm Glassnode’s earlier data released this year showed a new low in the number of BTC addresses holding BTC for over 5 years, indicating that some long-term investors are taking profits.
The large-scale movement of BTC has raised concerns that Mt. Gox creditors may decide to sell their recovered BTC on exchanges, flooding the market and driving prices down.
The daily inflow of BTC to exchanges has been hovering around 2016 levels, indicating that liquidity to absorb a large sale may be lower, amplifying these concerns.
However, not all creditors who receive BTC will immediately sell their recovered BTC compared to this larger scale of LTH sales. And this distribution has not yet formally taken effect.
Among creditors, some may choose to hold or buy more based on their investment strategies.
While the immediate market reaction may be negative due to the panic of short-term investors, resolving the Mt. Gox incident may enhance investor confidence in the overall health of the BTC ecosystem.
The Mt. Gox incident and its potential impact on BTC prices highlight some vulnerabilities that should be addressed at crucial moments in the market’s maturity.
While short-term fluctuations are expected, especially when a large amount of BTC is transferred, market stability and increased liquidity will boost investor confidence and set a secure tone for BTC’s long-term performance.