On Thursday, July 4, the now-defunct Japanese cryptocurrency exchange Mt. Gox transferred $2.7 billion worth of Bitcoin to a new wallet address. This marked the first significant transaction by the exchange since May, following several smaller test transactions on Wednesday, July 3. According to blockchain and crypto analytics platform Arkham Intelligence, a cold storage wallet belonging to Mt. Gox moved 47,228 BTC to an address ending in "6onk."
This substantial transfer aligns with the scheduled repayments to Mt. Gox creditors, with the company planning to distribute $9 billion in Bitcoin. In June, Mt. Gox trustee Nobuaki Kobayashi confirmed that preparations for these repayments were complete, with distributions set to begin in early July as per the recovery plan. Creditors have been awaiting these reimbursements since the exchange's collapse in 2014 following a hack.
Creditors of Mt. Gox are finally approaching recovery after a decade-long wait. A verification process led by the trustee in January paved the way for the release of funds, which had been delayed. While the exact dates for payments to designated exchanges remain undisclosed, the repayment process appears to be progressing. The total disbursement, expected to conclude by October 2024, includes 142,000 Bitcoin, 143,000 Bitcoin Cash, and 69 billion yen.
As Mt. Gox prepares to release funds, the Bitcoin market braces for potential price pressures. Several creditors have recently updated their claims, indicating progress in receiving both cryptocurrency and fiat reimbursements. Early reports of Mt. Gox's insolvency emerged in mid-April, with users on Subreddit detailing expected payments from their reimbursement tables. Some creditors have already successfully received fiat currencies in their bank accounts.
Analysts from K33 Research warn that reintroducing such a large volume of Bitcoin into the market could destabilize prices. The combined transfers from Mt. Gox and the German government, which moved nearly 50,000 Bitcoin seized earlier in 2024, have caused investor anxiety. This, coupled with movements of cryptocurrencies held in U.S. custody, could exacerbate market volatility.
After briefly surpassing $71,000 in early June, Bitcoin has entered its largest decline of 2024. The cryptocurrency fell below the stable $67,000 level and continued through several support zones. As of July 5, Bitcoin's price stood at $54,821.88, its lowest since late February.
Several factors may explain Bitcoin's decline, but investor fear over large transfers has played a significant role. The combined impact of Mt. Gox and German government transfers has led to a market bloodbath, erasing about $130 billion on July 4 and another $100 billion in just 60 minutes on July 5. If Mt. Gox creditors opt to sell their Bitcoin quickly, it could further depress prices.
While significant corrections are common in cryptocurrency markets, the current downturn could be particularly hazardous. Bitcoin has already dropped below crucial support levels, suggesting a potential freefall below $50,000. Historically, Bitcoin has rebounded reliably around $65,000, but the current decline has breached these support points, creating uncertainty about its near-term recovery.
