Could the disbursement of Mt. Gox funds trigger a substantial decline in Bitcoin value?

The crypto markets are currently haunted by the legacy of a crypto exchange that collapsed over a decade ago. Mt. Gox, once responsible for over 70% of Bitcoin transactions worldwide, went bankrupt in 2014 after suffering a massive hack that resulted in the theft of up to 850,000 BTC. Since then, the exchange’s users, many of whom were early Bitcoin adopters, have not received any compensation. However, efforts have been made to recover some of the stolen crypto, and around 142,000 BTC has been successfully retrieved. While this does not fully reimburse the victims, they can take solace in the fact that Bitcoin’s value has significantly increased over the past decade. In addition, due to the BTC hard fork in 2017, they are entitled to a portion of Bitcoin Cash as well. Compensation is expected to be paid to the creditors by October, putting an end to a lengthy process marred by multiple delays. However, some analysts are concerned about the potential impact this could have on the market. There are fears that once the Mt. Gox creditors receive their crypto, they might immediately sell it for fiat, which could result in increased selling pressure. Nevertheless, there are a few factors to consider. The Mt. Gox Investment Fund, the largest creditor, has confirmed that it has no intention of selling the Bitcoin it receives. Moreover, given the administrative complexities involved, the transactions are unlikely to occur all at once. Furthermore, considering Bitcoin’s daily trading volumes, which rarely dip below $10 billion, the market should be able to withstand the selling pressure. However, even the confirmation of the payouts alone could potentially unsettle traders. It’s also worth noting that many of the creditors have held onto their Bitcoin for a long time, believing in its potential even before it gained mainstream popularity. A poll conducted among Mt. Gox creditors revealed that a significant number of them intend to hold onto their digital assets rather than sell them. Some even expressed their desire to remain invested in Bitcoin for the long term. However, there are others who are considering cashing out and using the funds for vacations or investing in other cryptocurrencies. Mt. Gox’s collapse still stands as the largest crypto heist in the industry’s history in terms of dollar value. While two Russian nationals have been charged with laundering the stolen Bitcoin, the identities of other individuals involved in the hack remain unknown. Although the current crypto market landscape is vastly different from when Mt. Gox went bankrupt, with Bitcoin valued at a mere $550, similar incidents of exchanges halting withdrawals and collapsing have occurred since then. More than 100,000 users are currently awaiting compensation from the FTX exchange, but the recent surge in crypto valuations means they might receive more than their initial claim amount.