Global Finance Watch Exchange Collapsed a Decade Ago Launches Coin Compensation Plan Institutions Forecast Bitcoin to Soar to New Heights

21st Century Business Herald reporter He Liuying reported from Shenzhen
On July 2nd, CCData, a digital asset data company, released the “2024 Second Half Outlook Report” (hereinafter referred to as the “Report”), stating that Bitcoin has not yet reached the peak of the current appreciation cycle and may hit a new historical high this year.
On March 14, Bitcoin once soared to more than $73,000, setting a historical high of $73,835, and its price has fluctuated between $58,000 and $70,000 since then. As of the time of writing, Bitcoin is at $60,912.
Of great concern to investors is the recent announcement by the Mt. Gox Bitcoin exchange, which collapsed ten years ago, stating that it will begin to repay investors in Bitcoin and Bitcoin Cash (a branch of Bitcoin created in August 2017) starting in early July 2024.
The market is worried that once the repayment plan is initiated, users are likely to sell the “recovered” digital currency to ensure their safety, putting further pressure on the rising trend of Bitcoin.
Mt. Gox’s repayment is imminent
On June 24th, Mt. Gox announced that it will begin the repayment plan in July.
Mt. Gox, known in China as the “Mentougou” Exchange, is headquartered in Tokyo, Japan. Ten years ago, the exchange was the world’s largest Bitcoin trading platform, accounting for about 70% of global Bitcoin trading volume.
In February 2014, Mt. Gox claimed to have been attacked by hackers, with about 850,000 Bitcoins being stolen, most of which belonged to users, accounting for 88%, or about 750,000 Bitcoins. Based on the exchange rate at that time, the total amount of lost Bitcoins was about 11.4 billion yen. On February 28, Mt. Gox filed for bankruptcy protection with the Tokyo District Court.
Subsequently, Mt. Gox claimed to have recovered 200,000 Bitcoins. After a lengthy legal process, the court ruled in 2019 that over 140,000 Bitcoins would be delivered to a trust for safekeeping, and creditors would vote on a liquidation plan.
It is worth noting that over the past decade, the price of Bitcoin has skyrocketed from the original $600 to the current $60,000, and the opening of the repayment plan means that the “recovered” Bitcoin will become a passive investment for a decade, with its value increasing by a hundredfold.
John Glover, Chief Investment Officer of the cryptocurrency lending company Ledn, said that many people’s assets were trapped due to Mt. Gox’s bankruptcy, and this is the best investment they have made. Some people will obviously choose to take the money and run.
There are also concerns in the market that the repayment of Mt. Gox will put pressure on the rise in Bitcoin prices as creditors receive compensation and sell some of their Bitcoin assets.
Lennix Lai, Chief Commercial Officer of the cryptocurrency exchange OKX, believes that the concerns about selling may be short-term, as “many early users of Mt. Gox and creditors are long-term Bitcoin enthusiasts who are unlikely to sell all of their Bitcoin immediately.”
However, according to Jacob Joseph, a research analyst at CCData, the market is fully capable of absorbing the selling pressure, and its impact may have been reflected in recent price trends.
“According to relevant analysts, the value of the Bitcoin involved is about $9 billion, equivalent to more than half of the Bitcoin ETF inflow, which may have a certain impact on the market,” said Zhao Wei, a senior researcher at the OKX Research Institute, adding to the 21st Century Business Herald reporter.
Other industry insiders told 21st Century Business Herald reporters that as the market’s understanding and expectations of the Mt. Gox incident have been fully reflected in current prices, and given the long span of the compensation plan, the actual impact may be relatively limited.
Post “halving” to usher in a period of price expansion?
Earlier this year, after the U.S. Securities and Exchange Commission (SEC) approved the first spot Bitcoin ETF, Bitcoin experienced a strong upward trend, reaching over $73,000 in mid-March, followed by a relatively weak trend, with prices fluctuating above $6,000 for a long period.
Regarding Bitcoin’s recent performance, the digital asset investment company CoinShares’ analysis stated that the price trend has been mainly affected by the recent dot plot of the Federal Reserve, which predicts only one rate cut for the rest of 2024. Although this will have little impact on large tech companies, small and medium-sized stocks and rate-sensitive assets such as Bitcoin have been affected. In addition, a strong U.S. dollar has weakened Bitcoin’s momentum.
CoinShares also mentioned that Mt. Gox’s repayment plan could release a large amount of Bitcoin into the market, and the German government has also begun to sell Bitcoin, weakening sentiment. It is worth noting that the German government is one of the major holders of Bitcoin. According to the monitoring of on-chain analysts, the address marked as the German government has transferred 7,828 Bitcoins since June 19, worth about $496 million.
In the future, CCData’s report suggests that trading activity may decrease in the third quarter, which may mean that prices will show more sideways movement. However, the data and previous trends indicate that sideways price movement will be temporary, and prices are likely to break through previous historical highs before the end of the year.
“It is expected that the price will fluctuate between $50,000 and $70,000 for the year, and the core influencing factors are the U.S. interest rate cut schedule, followed by the trading volume of the U.S. Bitcoin ETF,” said Deng Jianpeng, a professor at the Central University of Finance and Economics Law School, to the 21st Century Business Herald.
The report also mentioned that after the fourth Bitcoin halving event on April 19, the price of Bitcoin has remained largely in a range of fluctuations for the next three months, combined with a decrease in trading activity, leading to speculation that this market cycle has already peaked.
“However, historical trends show that the halving event always heralds a period of price expansion, (based on previous data predictions) the upward period may last from 366 days to 548 days,” emphasized CCData.
“Half halving” is an important feature of Bitcoin. According to Bitcoin’s protocol, the total supply of Bitcoin is 21 million, and approximately every four years, Bitcoin mining rewards will be halved, the main purpose of which is to slow down the rate of new Bitcoin production and thus maintain the scarcity value of Bitcoin.
Data shows that in May 2020, the number of new Bitcoins added to the network through virtual “mining” (once every 10 minutes) was halved from 12.5 to 6.25. In April 2024, mining rewards will be halved again to 3.125. This process will continue until all 21 million tokens have been mined, which is expected to occur around 2140.
Regarding the trend of Bitcoin prices, Zhao Wei cautioned that overall, Bitcoin prices are usually affected by various factors such as the macroeconomic environment, regulatory dynamics, industry innovation, investor sentiment, and more.
Specifically, in terms of the macroeconomic environment, global economic recovery or recession trends may affect Bitcoin prices. In addition, the Federal Reserve’s policy is also a core factor affecting price trends. In terms of regulation, countries are currently actively formulating regulatory policies, and although it is still in the early stages and full of uncertainty, as global regulation gradually develops, the Bitcoin and its encryption industry are expected to usher in a healthy development. In terms of industry innovation, innovative technologies based on Bitcoin’s native concepts are gradually penetrating into various fields. When these innovative technologies penetrate into people’s daily lives, the encryption industry centered on Bitcoin may usher in a new stage of development.
Ethereum spot ETF or to be launched in July
On the other hand, the launch of the Bitcoin ETF has also made significant progress.
According to data from the crypto financial research service SoSoValue, as of the time of writing, the total net asset value of 11 spot Bitcoin ETFs in the United States is $53.733 billion, with a cumulative net inflow of $14.639 billion. Spot Bitcoin ETFs allow investors to buy products that track the price of Bitcoin without owning the underlying cryptocurrency.
This month, the timing of the launch of the Ethereum spot ETF has attracted much attention from the market. In June, U.S. SEC Chairman Gary Gensler said in response to related inquiries, “I don’t know the specific timing, but it’s going smoothly.” According to media reports, asset management companies are optimistic that the SEC may approve the first spot Ethereum ETF as early as mid-July.
Launched in 2015, Ethereum’s core feature is the application of “smart contracts.” When the conditions are met, smart contracts will be executed automatically without any party knowing who the other party to the transaction is, and thus without any intermediaries.
By total market value, Ethereum is currently the world’s second-largest cryptocurrency. As of the time of writing, the total market value of Bitcoin is $1.2 trillion, and Ethereum is $402.2 billion, with the former roughly 2.9 times the latter. The digital asset company Galaxy currently estimates that the inflow of the Ethereum spot ETF may be about one-third of the inflow of the Bitcoin spot ETF.
Deng Jianpeng believes that if the Ethereum ETF is launched, it will likely push up the price of Ether, and may also boost the price of Ethereum L2 tokens. Price increases may also attract more investors and developers to participate in the Ethereum network and stimulate other currencies to apply for ETFs.
Since the beginning of the year, the price of Ethereum has risen from $2,281 to $3,341, an increase of 46%, but the overall trend has been quite volatile.