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According to a recent study conducted by asset management firm CoinShares, the crypto market was more apprehensive about the potential impact of the Mt. Gox Bitcoin (BTC) sell-off than the actual impact it could have on BTC price. Concurrently selling all BTC could result in a 19% daily decline, although this is highly unreal.
At present, the Mt. Gox trustee is in possession of 142,000 BTC and an equivalent quantity of Bitcoin Cash (BCH), which are valued at $8.85 billion and $55.25 million, respectively. Luke Nolan, Ethereum Research Associate at CoinShares, emphasized that creditors were presented with two options: either receive 90% of the amount they were owed in kind this month or wait until the settlement of the civil litigation.
An estimated 75% of creditors elected to repay their debts early, which resulted in a reduction of the July distribution to approximately 95,000 BTC. Furthermore, the list of creditors at Mt. Gox includes claims of 10,000 BTC and 20,000 BTC by Bitcoinica and MtGox Investment Funds (MGIF), respectively.
Conversely, MGIF has previously stated that it has no intention of disposing of its bitcoin assets. Nolan further stated, “We may decrease the possibility of market impact to 75,000 bitcoin from the 95,000.”
Consequently, individual investors will receive a maximum of 65,000 BTC. However, Nolan emphasizes that investors’ holdings have increased by approximately 13,600% since the Mt. Gox incident, and the sale of all their BTC would be “an exorbitant tax event.”
Furthermore, the distributions will take place on multiple exchanges on individual dates throughout the month, which reduces the likelihood of significant concurrent selling. Over the past year, the average daily exchange inflows have been 32,000 BTC, with the apex occurring on January 11th at 150,000 BTC during the introduction of the spot Bitcoin exchange-traded funds (ETFs).
“We can estimate the potential price impact by deconstructing the 75,000 bitcoin that could enter the market into several scenarios using a straightforward Sigma Root Liquidity model. In the worst-case scenario, it is possible to sell US$2.8 billion, based on our estimate of the daily traded volume on trusted bitcoin exchanges, which is US$8.74 billion.”
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