The pressure on Bitcoin repayment at Mt.Gox has raised concerns among experts like Alex Thorn about the potential impact on Bitcoin Cash. The repayment strategies of Mt.Gox, Gemini, and FTX have sparked questions about market stability and investor sentiment.
2024 is considered a lucky year for Bitcoin (BTC), especially with the launch of a Bitcoin ETF, reaching a historical high of $73,000, and the anticipated Bitcoin halving event. However, as the cryptocurrency community prepares for the full approval of an Ethereum (ETH) ETF in July, Bitcoin seems to be taking a backseat.
Indeed, at the time of writing, while ETH has surged by 1.58% in the past 24 hours, BTC is flashing red candles on its daily chart, trading at $6100.
What’s behind the decline of Bitcoin? While many attribute the drop to the Mt.Gox repayment plan, Alex Thorn, Chief Research Officer at Galaxy Digital, offered a different perspective, suggesting that Bitcoin Cash may be more affected.
Thorn pointed to a major hack suffered by Mt.Gox in 2014, resulting in the loss of 740,000 BTC (worth $15 billion today). Repayments will begin in July 2024, using Bitcoin and BCH, potentially increasing selling pressure on these cryptocurrencies as creditors receive and may sell their newly acquired assets.
To closely monitor the situation, many executives suggest using Bitcoin exchange balances as a reliable indicator of Bitcoin price trends. However, popular commentator Matthew Hyland criticized the importance of reducing forex supply, calling it “overestimated.”
It’s important to note that this isn’t the first time Mt.Gox has done something like this. In addition to Mt.Gox, Gemini has also announced a plan to compensate users affected by its suspended Gemini Earn program. Meanwhile, the cryptocurrency exchange FTX, which underwent bankruptcy proceedings last year, has also announced a plan to resolve its debts.
However, analysts at K33 Research suggest that the impact of these repayments on market sentiment may differ from other creditors’ resolutions. Unlike Mt.Gox and Gemini, FTX intends to execute cash-based repayments, and this difference in repayment methods may affect investors’ perspectives and market stability in different ways.