Mt. Gox Bitcoin Refund Payouts to Creditors NOT Likely to Crash Crypto Markets
Bitcoin Would not Crash After Mt Gox Payouts
During the last weeks there was speculation regarding Mt Gox payouts and the effects that they could have in the cryptocurrency market. Creditors of the exchange started filing civil rehabilitation claims during the last month.
One of the several creditors, known as Kim Nilsson, said that payouts will definitely crash the cryptocurrency market. However, it seems that his claims are far from reality.
Mt Gox was one of the most important exchanges in the world in 2013. It was located in Japan and it had users from different countries. In 2014 it was hacked and users lost 850,000 BTC, close to $475 million dollars.
Although users will not receive the Bitcoin, they will be receiving US dollars. After the liquidation that took place back in 2017 when Bitcoin was skyrocketing, between 138,000 BTC and 170,000 BTC will be distributed to creditors. This is why Nilsson believes that the market would end up in a crash when the coins will be distributed.
These payouts will not happen until February 2019. This is when Mt Gox’s trustee will be submitting a payout plan to he Japanese courts that follow the issue.
However, if all the BTC received by investors are sold in the market, Bitcoin would not crash. At the moment, these BTC are valued at $1.13 billion dollars, this is over 25% of the daily trading volume in Bitcoin’s spot market. Currently, according to CoinMarketCap, Bitcoin has a volume of $5.52 billion dollars.
Clearly, 20%-25% of the daily trading volume would not be enough to crash the whole market and trigger a new bear market. It might have a slight influence in Bitcoin’s prices during a short period of time. Moreover, not all the investors are going to dump their Bitcoins, that means that the effect on the market would be even smaller.
Additionally, not all the creditors will receive the BTC payouts at the same time and some of them would even sell them in OTC markets and peer-to-peer trading networks.
As mentioned before, these payouts should have a very small impact in the market. However, there is a small chance that it could have a bigger impact if other investors start panicking and selling.