The imminent repayment deadline of Mt. Gox, potentially impacting the cryptocurrency market, looms as the Bitcoin halving event in 2024 approaches, marking another significant market event.
Mt. Gox, the infamous Bitcoin exchange that fell victim to a security breach in 2014, is set to repay its creditors by the end of October 2023. This long-awaited repayment has the potential to significantly impact the cryptocurrency market, according to industry experts.
Founded in 2010, Mt. Gox was once the largest Bitcoin exchange worldwide, handling around 70% of all BTC transactions before its unfortunate downfall.
Following the security breach, where 850,000 BTC—equivalent to 4% of all Bitcoin to be issued—were lost, Mt. Gox became one of the largest cryptocurrency bankruptcies in history. Nine years later, creditors are still awaiting repayment.
WhaleWire founder and CEO, Jacob King, believes that the repayment of Mt. Gox will be a unique event with a significant impact on the market. King suggests that after nearly a decade of waiting, most creditors are likely to sell at least a portion of their BTC once they regain possession.
This influx of sell orders could potentially exert downward pressure on prices and lead to a market downturn. King also highlights the previous delays in the repayment process, which have eroded investor confidence.
While some creditors anticipate selling their Bitcoin, others express a desire to hodl. A Mt. Gox creditor interviewed by Cointelegraph expects non-claimant Bitcoin holders to sell due to fears of a price decline when news breaks about the coins being released.
Mt. Gox aims to repay over 10,000 creditors worldwide by the end of October. However, due to the limited funds recovered, only a portion of the total losses will be reimbursed. Reports indicate that Mt. Gox plans to repay 142,000 BTC ($4.3 billion), 143,000 Bitcoin Cash (BCH) worth approximately $40 million, and ¥69 billion ($510 million) in fiat currency. Repayments will be made using a combination of cryptocurrencies and fiat, with each investor receiving a customized payout.
Whale Alert co-founder, Frank Weert, acknowledges the significance of the Mt. Gox repayment event. However, he believes the market impact will depend on the manner in which the funds are released and how the media reports it. Weert suggests that while some creditors may choose to cash out, a massive sell-off is unlikely.
The forthcoming repayment of Mt. Gox funds is an unprecedented event in the cryptocurrency industry. Its outcome will be closely watched as the market braces for potential fluctuations.