Bitcoin dropped by 5% in the past week amidst speculation that upcoming creditor payouts from the now-bankrupt MT Gox exchange could have a negative impact on the cryptocurrency market. The civil rehabilitation trial for the Tokyo-based bitcoin exchange concluded this week, which means creditors are set to receive their distributions starting on March 10. Concerns over the 142,000 bitcoin to be released to creditors have arisen since there’s a possibility the currency could be quickly sold off once it becomes available.
Crypto experts are warning of a potential market shock should creditors of the 2014 hack at MT Gox exchange receive their full payout of approximately $3 billion in bitcoin (BTC-USD), bitcoin cash (BCH-USD), and Japanese yen (JPY=X). This would total roughly 142,000 BTC, 143,000 bitcoin cash, and 69 billion Japanese yen. However, these assets will not be released simultaneously but in stages over the coming months. This could lead to a large influx of coins being dumped into the market should creditors choose to take back ownership of their coins.
The recent issues at Silvergate Bank and the upcoming Ethereum network upgrade (ETH-USD) in Shanghai have created stern headwinds for the crypto market. Silvergate stock (SI) has dropped 95% over the past year and faces US regulatory probes due to client collapses, such as FTX and related hedge fund Alameda Research. Meanwhile, the upgrade in Shanghai will enable those who have ‘staked’ their ether to withdraw it and potentially sell on the market again. Such events could increase the bitcoin supply and thus drive down prices further.
Creditors of the Mt Gox exchange have been waiting almost a decade to receive their due compensation after hackers stole 850,000 Bitcoin in 2014. However, only a portion of these funds has been recovered, leaving creditors with a payout of just 21% of their original claims. The market began the week flat, with Bitcoin valued at $22,416 and Ether at $1,569, indicating a shift in global sentiment towards digital currencies.
