Mt. Gox Begins Repayments in Bitcoin (BTC) and Bitcoin Cash (BCH), Marking the End of a Near-Decade Wait

This long-awaited move marks the end of a near-decade wait for some users to reclaim their lost assets following the infamous 2014 hack.

Mt. Gox, once the world’s leading cryptocurrency exchange, has begun making repayments to customers in Bitcoin (BTC-USD) and Bitcoin Cash (BCH-USD). This move comes after a long-awaited wait for some users to reclaim their lost assets following the infamous 2014 hack. Here's a breakdown of what this development means for the crypto market and its potential implications.

The Long-Awaited Repayments Begin

Mt. Gox, which handled over 70% of all Bitcoin transactions in its early years, announced last month that it has started making repayments to customers. This announcement has now come to fruition, signaling the end of a protracted period of uncertainty for many users. The hack in 2014 led to the loss of approximately 740,000 Bitcoin, pushing the exchange into bankruptcy. For many, this repayment is a long-overdue resolution.

According to Willy Chuang, COO of crypto exchange WOO X, the long-term impact of these repayments might be less severe than anticipated. Despite the initial market fear triggered by the potential sell-off, Chuang believes the market will gradually absorb the selling pressure.

“I think the market will slowly digest the selling pressure,” Chuang told CoinDesk in a Telegram message. “The selling pressure will be there for a while, but I don’t think it will be a huge impact in the long term.”

Market Reaction and Selling Pressure

The news of the repayments has undeniably added selling pressure on Bitcoin and the broader crypto market. Mt. Gox's movement of 47,228 BTC as part of the repayment process has created some market jitters. Bitcoin's price dropped to a five-month low of $53,600, leading to the liquidation of over $580 million in bullish bets. However, there is a silver lining.

“The market is expecting most Mt. Gox users to dump their tokens, but if the sell-off is lower than expected, we could see the market bouncing back,” Rachel Lin, founder at on-chain crypto exchange SynFutures, told CoinDesk in a Telegram message. “Also, don’t forget about the German and US government, who own a significant amount of BTC.”

Repayment Process and Timeline

Customers might have to wait between 60 to 90 days to receive their payouts, former CEO Mark Karpeles confirmed in a direct message to CoinDesk on X (formerly Twitter). He explained that the timelines are linked to the number of transfers each exchange needs to process, which might vary.

“It depends on the exchange how quickly they can process the large volume of transfers,” Karpeles said.

Approved exchanges like Bitbank, BitGo, Bistamp, Kraken, and SBI VC Trade are handling the repayments, each following its internal policies.

“Each exchange has its own internal policy for handling large volumes of transfers, so the waiting time may vary,” former Mt. Gox CEO Mark Karpeles told CoinDesk in a direct message on X (formerly Twitter).

Implications for the Crypto Market

The commencement of repayments by Mt. Gox is more than just a relief for the affected users; it is a significant event for the entire crypto market. The selling pressure from these repayments is expected to influence Bitcoin's price in the short term. As Rachel Lin highlighted, the market might see a drop to around $50,000 if the sell-off is substantial.

“If a large number of Mt. Gox users decide to sell their Bitcoin immediately, it could put downward pressure on the price, potentially causing it to drop to around $50,000,” Lin said.

However, the long-term impact remains a topic of debate among experts. Some believe that the entry of new buyers at lower price points will eventually cushion the impact of selling pressure.

“In the long term, I believe the impact will be minimal as any price drop will be quickly bought up by new buyers entering the market at lower price points,” Chuang added.

Moreover, movements from other key Bitcoin holders like the German Federal Criminal Police Office, which has been transferring millions of dollars worth of Bitcoin to exchanges, imply ongoing selling pressure. This complex interplay of factors makes the near-term outlook for Bitcoin particularly volatile.

Key Takeaway

The repayment process initiated by Mt. Gox marks a pivotal moment in the cryptocurrency world. While it brings closure to a painful chapter for many users, it also introduces new dynamics to the market. Investors and traders will be watching closely to see how the market absorbs this selling pressure and what the long-term implications might be.

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