Bitcoin Down 5% Ahead Of Mt Gox Payouts

by James · March 6, 2023

Kolin Burges, a self-proclaimed cryptocurrency trader and former software engineer who hailed from London, holds a placard to protest the Mt. Gox, in front of the building where the digital marketplace operator is based in Tokyo on February 25, 2014. The website of Mt. Gox looks set to be taken down, shortly after six major Bitcoin exchanges issued a joint statement distancing themselves from the troubled Tokyo-based bitcoin exchange. Tokyo-based Mt. Gox was a founding member and one of the three elected industry representatives on the board of the Bitcoin Foundation. REUTERS/Toru Hanai (JAPAN - Tags: BUSINESS CIVIL UNREST SCIENCE TECHNOLOGY) — A man holds a placard to protest the Mt. Gox, in front of the building that housed the now-defunct digital marketplace operator in Tokyo. Photo: Toru Hanai/Reuters

Bitcoin experienced a 5% drop in the past week as traders speculate that upcoming creditor payments from the bankrupt MT Gox exchange could affect the cryptocurrency market.

The civil rehabilitation trial surrounding the Tokyo-based bitcoin exchange has ended, and payments to creditors are scheduled to begin on Friday, May 10. March.

However, there are fears that the 142,000 bitcoins to be released to creditors could be dumped on the market as soon as they become available.

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The size of a possible $3 billion bitcoin payout has led cryptoanalysts to warn of a possible market shock where recipients dump their newly acquired bitcoin en masse after reclaiming ownership of their coins.

The amounts to be dispensed are 142,000 BTC (BTC-USD), 143,000 bitcoin cash (BCH-USD) and 69 billion Japanese yen (JPY=X).

However, the total amount of assets to be paid out to creditors following the 2014 hack of the MT Gox exchange will not be released to creditors immediately, but in stages over the coming months.

Any resulting increase in bitcoin supply could drive prices lower at a time when the market is already facing severe headwinds from the recent problems at Silvergate Bank, and the upcoming Shanghai upgrade of the Ethereum (ETH-USD) network.

Shares in crypto-friendly bank Silvergate ( SI ) are down 95% in the past year, and it is facing US regulatory probes over the collapse of major clients such as FTX and related hedge fund Alameda Research.

Ethereum’s Shanghai upgrade will allow those who have ‘staked’ their ether to withdraw it, giving them the ability to sell on the market again. Staking is the process of locking ether on the blockchain for a specific period of time to validate the network.

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MT Gox creditors have been waiting nearly a decade to get some of their money back after hackers stole 850,000 bitcoins from the MT Gox exchange in 2014.

Only a fraction of the total amount of stolen bitcoin has been recovered, resulting in a payout of only 21% of each creditor’s original claim.

With increasing headwinds, both bitcoin and ether start the week flat, with the world’s largest digital asset at $22,416, and ether at $1,569.