Research Director at the cryptocurrency services company Galaxy attempts to downplay concerns that the long-awaited payout from Mt. Gox could trigger a Bitcoin (BTC) crash.
In a recent interview, Alex Thorn stated that the now-defunct crypto exchange Mt. Gox is required to pay back creditors around 142,000 BTC valued at nearly $9 billion from July to October.
Last week’s news of the upcoming distribution of owed Bitcoin (BTC) tokens from Mt. Gox caused shockwaves in the crypto markets, resulting in over $313 million being liquidated. However, Thorn believes that worries about the Mt. Gox situation may be exaggerated.
His analysis suggests that only a small portion of the total distributed BTC is likely to be sold on the open market. He estimates that less than half of these 150,000 BTC will actually be available for sale. Thorn explains this by pointing out that some creditors have accepted a discount of 10% to 11% for early repayment, reducing the total to 94,600 coins.
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Thorn further explains that many creditors had previously sold their claims at a discount to funds, estimating that these funds currently hold around 20,000 BTC.
Given that these are managed by investors looking to hold long-term positions in Bitcoin, Thorn believes that as a result, the total number of BTC available for sale will decrease to around 74,000 coins.
Additionally, he states that 10,000 BTC will be received from the cryptocurrency exchange Bitcoinica, which cannot sell them immediately due to the ongoing insolvency process in New Zealand.
Overall, Thorn predicts that only about 64,000 BTC will actually be in the hands of traders and assumes that most of these recipients are early Bitcoin investors who are more likely to hold onto their tokens rather than sell them. He concludes that the potential for a significant market impact from the Mt. Gox payout will be smaller than expected.
