Why Mt. Gox Bitcoin Distributions Matter Less Than You Think

Hey LinkedIn,

You’ve likely heard of the notorious Mt. Gox and the 'flood' of sell pressure that's about to unleash, sending prices lower.

This is an over-reaction, in our opinion. Here's why the Mt. Gox repayments matter less than you may think.???

An event 10 years in the making

Once the world's largest crypto exchange, Mt. Gox suffered a major hack in 2014 and later shut down. Since then, affected users have fought to get their cryptocurrency back.

Repayments of Bitcoin (BTC) and Bitcoin Cash (BCH) have been delayed multiple times. This week, it was finally confirmed that these will start in early July.

BTC dives on the news

Many are worried that roughly 140,000 BTC (≈$8.6B) will soon be sold on the open market, causing BTC's price to crash.

But it might not be as bad as you think

It's wrong to interpret this as "$8.6B worth of sell pressure will hit the market in July."

Firstly, these repayments aren't happening all at once.

Secondly, not everyone who receives their BTC will immediately sell it on their preferred exchange.

According to Galaxy Digital, roughly 75% of creditors chose to take an “early” pay-out from Mt. Gox. Of these, 30,000 BTC are owed to claims funds or large entities, leaving ~65,000 BTC for individual creditors.

Galaxy expects individual creditors will be more diamond-handed than the market expects due to three reasons:

1. Creditors are skewed towards long-term Bitcoiners
2. Individual creditors resisted multiple years of claim offers
3. Tax implications of selling

The same can't be said for BCH, which has less demand to absorb the selling pressure.

If 15% of all the redistributed BTC is sold, this would only be ~0.2% of BTC's current market cap.

If the distributions happened in 2017 or 2020, there may have been a more significant impacts, but with ETF issuers and companies like MicroStrategy and Tether accumulating, it's a small dent in the broader picture.

Don't blame Mt. Gox for the sell-off

BTC's recent pullback is likely?not just about the Mt. Gox distributions. There were other factors at play:

• U.S. Bitcoin ETFs recorded their seventh straight day of net outflows, totalling $1.1B.
• The Federal Reserve has become less aggressive in its forecasted rate cuts, now expecting just one by year-end.
• Ethereum ETFs will probably launch in July. Are traders repositioning from BTC to ETH?
• Authorities from Germany and the U.S. have sent hundreds of millions worth of seized BTC to exchanges in the past week, presumably to sell.

There will be sell pressure, but if prices keep falling, it likely won't be solely due to the Mt. Gox repayments.

Collective Shift contributor Checkmate best summed it up in his latest member article:

"I see a lot of folks looking for some entity to point the finger at for being a suppressing seller…but in reality, the most obvious answer is we simply don’t have the influx of marginal buy-side demand to push it higher! It will come, but not just yet."

SEC closes investigation into Ethereum 2.0, won't pursue legal action

What happened: Industry powerhouse Consensys revealed the U.S. SEC ended its investigation into the second-largest cryptocurrency. The SEC reportedly started these investigations after Ethereum moved to proof of stake in 2022.

Why it matters: This is a win for ETH ahead of the Ethereum ETF launches as it may reduce the perceived regulatory risk associated with the cryptocurrency. The closure of the investigation may also persuade outcomes in other crucial legal battles currently taking place (e.g. SEC vs Coinbase).

• Blast announced its BLAST tokenomics and airdropped an allocation to early users.
• Solana?introduced blockchain links (blinks) to make it easy for users to link to onchain actions from any website on the Internet, including social platforms like X/Twitter.?
• AO Computer released its tokenomics, with AR holders entitled to 36% of the total supply.
• Ethereum recorded its longest inflationary period (73 days) since the Merge in September 2022.
• Arbitrum DAO proposed ARB staking backed by 50% of surplus sequencer fees to incentivise more governance participation and increase utility.

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