Mt. Gox Repayments Won\'t Collapse Bitcoin (BTC) as Less Than Half of Coins Will Be Sold, Says Galaxy Research Head

The head of research at crypto financial services firm Galaxy is allaying fears that the highly anticipated Mt.Gox repayments could trigger the collapse of Bitcoin (BTC).

The head of research at Galaxy Digital is downplaying fears that the upcoming Mt. Gox repayments could crash Bitcoin (BTC).In a new interview on the Unchained Podcast YouTube channel, Alex Thorn says that the defunct crypto exchange is set to repay creditors around 142,000 BTC, currently valued at nearly $9 billion, starting in July and continuing through October.

News of Mt. Gox’s impending BTC disbursement rocked crypto markets last week, triggering over $313 million in liquidations.

But Thorn says the fear surrounding the Mt. Gox saga is likely overblown, as his research suggests that less than half of the coins will be available to be sold on the open market upon issuance. He also says that the recipients are likely to hold on to their BTC stack instead of selling right away.According to Thorn, individuals set to receive their BTC in the coming months agreed to accept a 10% to 11% haircut to avail of Mt. Gox’s early payout scheme. Thorn estimates that 75% of creditors accepted the deal, bringing the number of BTC for delivery down to 94,600 coins.The Galaxy executive adds that many people previously sold their bankruptcy claims to funds at a discount. According to Thorn, funds were aggressively buying claims from Mt. Gox users who did not want to wait years before seeing a single cent of their money.“A lot of people did sell their coins and we think about 20,000 of the Bitcoin is held in these funds. So let’s set that aside for a second. So now we’re down to 74,000 coins.”

Thorn notes that the funds that bought the bankruptcy claims are unlikely to be a big source of selling because he believes the entities that provided liquidity to purchase the claims will hold the coins once released.

“My understanding in talking to some of them is that they all plan to deliver in kind to their LPs (liquidity providers)… Again in talking to some big LPs in these funds as well as some of the funds that these LP bases are almost entirely comprised of high-net-worth Bitcoiners who effectively want Bitcoin at a discount… In doing some diligence on this, we’re pretty sure this is actually diamond-handed people who wanted to stack at a discount.”According to Thorn, the last cohort that will receive BTC from Mt. Gox is the crypto exchange Bitcoinica. Thorn says the exchange is set to collect 10,000 BTC but notes Bitcoinica can’t sell its Bitcoin trove right away because it has to go through its bankruptcy process in New Zealand.All in all, Thorn estimates that 64,000 BTC will be disbursed to the trading accounts of creditors. The Galaxy executive believes these entities are early Bitcoiners who are more likely to hodl on to their stacks instead of selling upon receipt.

“In general, I don’t think there will be a lot of selling. That’s what this all boils down to. Or at least I should say I think that there will be much less selling than a naive look at the headline suggests.”

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