Mt. Gox, the bitcoin exchange that went bankrupt in 2014, has taken an important step in its rehabilitation process by moving 141,686 BTC last week.

This action marks the company's first significant move in five years and has generated great expectations about its possible impact on the price of bitcoin.

While former Mt. Gox CEO Mark Karpeles has clarified that this is not a bitcoin sale, uncertainty remains over the creditors' intentions.

The bitcoins in Mt. Gox's possession have remained untraded for 10 years. At the time of the exchange debacle, the price of bitcoin ranged between $500 and $1,000 per unit. Today, the value of bitcoin is 20 times higher than it was back then.

For several years there has been speculation about the sale of BTC held by Mt. Gox. In 2022, there were already rumors of its possible sale, however, it was not until last week that a movement was seen that showed significant progress.

If victims receive the funds that were stolen or withheld from them, it could be profitable for them to sell now and make a profit, leading to a potential drop in prices, due to increased supply in the market.

However, many creditors may choose to hold onto their bitcoin, especially those who are long-term holders or believe in the currency's future.

For the American exchange Coinbase, the impact on bitcoin's performance is "difficult to predict", since it depends on whether creditors decide to sell part, all or none of what they are going to receive, it highlighted in a report.

"Many creditors who were willing to sell have already sold their claims to third parties, while the two largest creditors, representing around 20% of all Mt. Gox claims, are covered."

Coinbase

For this reason, the exchange maintains that the remaining creditors, who chose not to accept an early payment and are awaiting resolution of the rehabilitation plan, are more likely to hold on to their bitcoin rather than sell it, given their support and relatively early adoption of bitcoin.

In fact, he believes these creditors will use other methods to manage their investment exposure other than immediately selling their rehabilitation payment.

Income taxes may prevent higher bitcoin sales

For its part, the Galaxy Digital firm indicated that of the 140,000 BTC, 65,000 BTC were delivered to individual creditors and another 30,000 BTC were delivered to claims funds and a separate bankruptcy.

Alex Thorn, head of research at Galaxy, agrees says a large majority of these creditors who bought BTC at $451 or less are more ideologically pro-bitcoin than the broader base of holders today.

“These creditors resisted compelling and aggressive offers from claim buyers for 10 years in multiple bear markets, suggesting that these early bitcoin adopters want to get their coins back and hold on to them.” 

Galaxy Digital, investment company.

Thorn adds capital gains taxes as a factor that can stop a possible sale, since creditors have increased their investments by a minimum of 1,400% in dollar terms.

$1.5 billion could enter the market, according to NYDIG

The investment company NYDIG, through analysis based on surveys conducted among creditors throughout the bankruptcy process, says there is a possibility that $1.5 billion in bitcoin will enter the market when distributions are made.

That represents approximately 21,000 BTC, calculated based on the current price of the coin.

While this is a significant sum, it is important to note the daily trading volume of bitcoin, it ranges between $1 billion and $1.5 billion for bitcoin priced in dollars and $4 billion for bitcoin priced in USDT.

Therefore, $1.5 billion might not have that big of an impact compared to the daily spot trading volume in USD and USDT.

140,000 BTC is not a negligible amount, but, after several years, the panorama is different. The purchasing pressure exerted by bitcoin spot ETFs is considerable, in five months after being issued they collectively hold 239,000 BTC, as bitcoin has reported.

If you add constant institutional adoption, the release of Mt. Gox bitcoins (even if they were sold) would not have such a large impact on the market, because there is a demanding force that will quickly absorb that supply.

What do you think will happen? Drop your thoughts in the comment section!