The Mt. Gox Japanese exchange, which made headlines in 2014 when it lost over 850,000 bitcoins, is once again in the news. In 2014, Mt. Gox filed for bankruptcy with millions of dollars worth of cryptocurrencies to be paid back to its users.
Mt. Gox was the largest exchange in the world, and it used to handle almost 70% of all BTC trades in 2013-2014. It got hacked and lost 750,000 of its customers’ BTC and 100,000 of its own BTC reserves, which were equivalent to approximately $500 million in 2014.
Ever since, there have been legal proceedings, and the Tokyo district court appointed trustees to distribute approximately 150,000 BTC among the creditors of Mt. Gox. The exchange is supposed to compensate its users with 150,000 BTC in total, and the date of compensation kept on getting pushing back.
However, the latest deadline for submitting the plan for the distribution of BTC to compensate for the losses of the users of Mt. Gox is December 15, 2020. The appointed trustees have to devise a plan to distribute these 150,000 BTC from the company’s reserve wallet to the stolen wallets of users.
How Much Is 150,000 BTC Worth Today?
With BTC trading at $19,000, 150,000 BTC is worth a $2.85 billion dollars.
Is This a Bearish Event?
Yes. This is fundamentally quite a bearish event. When 150,000 BTC will be available for sale by retail users, it could lead to a significant drop in price. Most of this BTC will have to be sold in the market and not via OTC since these BTC will be distributed amongst a wide range of users, and each user will be getting a small fraction.
Will the Sell-off Happen Immediately?
The distribution won’t happen immediately. Trustees are yet to devise a plan for distribution of these BTC. Whether the distribution happens at once to all or it will be given in parts is still unclear. Once the plan is submitted, the court has to approve the same. So it is safe to assume that this sell-off won’t happen overnight.
However, many users who have been waiting for their stolen funds for over six years would most likely sell their BTC at a profit as soon as they are available to them.
What Would Be the Possible Targets for BTC?
If we combine this fundamental news along with technical analysis, we can see BTC dropping towards the support zone of $17,600. Failure to hold this support could lead to a drop towards $15,500 and $13,800. This would be a healthy correction to the exhaustive bullish rally that BTC has been in since March 2020. Unless BTC flips the previous high of $20,000 to support, our overall view on BTC is bearish.
Be ready with your FIAT to catch the BTC dip in case it goes down to the above mentioned levels.
Images courtesy of TradingView.
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