The crypto market experienced a sell-off this week after news broke that Mt. Gox, the infamous defunct exchange, would begin repaying creditors. This payout, valued at over $665 million in Bitcoin (BTC), sparked fears of a major market sell-off. However, despite the initial dip, market makers and investors remain cautiously optimistic about Bitcoin’s future.
While the short-term impact is undeniable, industry leaders believe the long-term outlook for Bitcoin remains positive. Rich Rosenblum, co-founder of GSR, acknowledges the immediate pressure on the market but highlights the potential for a rebound. He emphasizes that even though the payout represents a significant portion of Bitcoin mined after the last halving event, there’s ample time for the market to absorb it before year-end.
Adding to this optimism is the possibility that a smaller amount of Bitcoin will actually hit the market than initially anticipated. Experts like Teddy Fusaro, President of Bitwise, point out the uncertainty surrounding the exact number of coins creditors will ultimately sell. Additionally, Alex Thorn, Head of Research at Galaxy, suggests that a significant portion of the distributed Bitcoin might be held onto by creditors, further mitigating the sell pressure.
Thorn’s analysis delves deeper, suggesting that the number of distributed coins might be lower than expected. He explains that Mt. Gox only recovered a portion of the lost Bitcoin, and creditors opting for early payouts face a 10% reduction. Furthermore, a substantial amount is likely earmarked for claims funds, reducing the total amount that could potentially flood the market.
Also Read: Mt. Gox Repayment: Boon or Bane for Bitcoin? 8,500% Price Rise Could Spark Sell-Off
This perspective is bolstered by the notion that creditors, being early adopters of Bitcoin, might be more inclined to hold onto their coins. Having already resisted offers from claims funds, they might view this as a long-term investment opportunity rather than a quick sale.
The initial movement of Bitcoin by Mt. Gox undoubtedly caused jitters, but the broader market sentiment appears to be leaning towards cautious optimism. While the short-term price fluctuations are to be expected, industry leaders believe the market has the capacity to absorb the selling pressure. Furthermore, the possibility of a smaller than anticipated influx of Bitcoin and the potential for long-term holding by creditors could further dampen the sell-off’s impact.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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