Following the recent announcement regarding the distribution of over 140,000 Bitcoin (BTC) from the defunct Mt. Gox exchange, the cryptocurrency market experienced a significant decline. Bitcoin fell below key support levels, causing concern among investors. However, analysts, including Galaxy’s head of research Alex Thorn, believe that the fear surrounding the impact of this distribution is exaggerated.
Thorn’s research indicates that the majority of selling pressure will come from individual creditors who are receiving less than half of the total 140,000 Bitcoin. These creditors, who have been involved in Bitcoin since its early days, are unlikely to sell their holdings. Thorn stated that creditors are long-term Bitcoin holders who have resisted previous offers to sell their assets for USD, indicating their preference to hold onto their Bitcoin.
Despite the market’s reaction to the Mt. Gox announcement, Thorn believes that the impact of the upcoming distribution may not be as severe as anticipated. He predicts that only around 65,000 BTC will be sold by individual creditors, rather than the full 140,000 Bitcoin. Thorn’s research suggests that approximately 75% of creditors will opt for an early payout in July, resulting in a distribution of about 95,000 BTC.
While there are concerns about the potential impact of 6,500 BTC entering the market if 10% of the coins allocated to individual creditors are sold, Thorn emphasized that this may not have a significant long-term impact on prices. He also highlighted that Bitcoin Cash (BCH) is expected to be more heavily affected by the distribution, as creditors are likely to sell a significant portion of their recovered BCH.
Thorn pointed out that the distribution of BCH could lead to increased downward pressure on its price due to factors such as low liquidity and the lack of original purchaser interest in the coin. With fewer buyers in the market for BCH, the selling pressure from creditors could result in a more pronounced impact on its price compared to Bitcoin.
Overall, while the market initially reacted negatively to the Mt. Gox distribution announcement, analysts like Alex Thorn suggest that the impact may be less severe than expected. Investors are advised to monitor the situation closely and consider the potential implications of the upcoming distribution on both Bitcoin and Bitcoin Cash prices.