Mt. Gox Payout Won’t Crash the Market – CoinShares

CoinShares analysts believe that concerns about the impact of the Mt. Gox payout on the crypto market are likely overblown.

Mt. Gox, once the largest Bitcoin exchange in the world, collapsed after significant hacks between 2011 and 2014. Since then, the exchange has recovered many of the lost coins and is in the process of repaying its obligations to creditors. This protracted bankruptcy process is a source of uncertainty due to potential selling pressure.

In its latest report, CoinShares suggests that many of Mt. Gox’s creditors are likely to hold on to most of their recovered coins to minimize their tax burden. They argue that when a sale does occur, it will likely be spread across various crypto exchanges, allowing sufficient liquidity on the buyer’s side to take the selling pressure.

The report highlights that lenders are expected to receive around 15% of their original BTC holdings, which, given the significant rise in the price of Bitcoin since the exchange crash, translates to a roughly 13,600% gain.

This huge profit could result in a significant tax event if the lenders decide to sell immediately. Because of this, many lenders may choose to sell only a small portion of their holdings or hold on to their coins for now.

CoinShares also points out that over the past 12 years, creditors have had numerous opportunities to sell their claims for repayment in U.S. dollars, but have largely chosen not to do so. This suggests that many creditors may be reluctant to sell their BTC immediately upon receipt.

In addition, distributions will take place on multiple exchanges – Bitstamp, Kraken, Bitbank, BitGo, SBI VC Trade and others – at different times, which should reduce the likelihood of large simultaneous sell-offs.

Alexander Stefanov