Bitcoin has fallen 5% over the past week amid speculation that an impending payment to creditors of the now-defunct MT Gox exchange could have a negative impact on the cryptocurrency market. The Tokyo-based bitcoin exchange's civil restoration trial concluded this week, meaning creditors will start receiving their distributions starting March 10. Concerns are growing that 142,000 bitcoins will be released to creditors, as the currency is likely to be sold as soon as it becomes available.
Cryptocurrency experts warn that creditors of the 2014 MT Gox exchange hack would receive about $3 billion in Bitcoin (BTC-USD), Bitcoin Cash (BCH-USD) and Japanese Yen (JPY=X ). That's a total of roughly 142,000 bitcoins, 143,000 bitcoin cash, and 69 billion yen. However, these assets will not be released at the same time, but will be released in stages over the next few months. This could lead to a flood of coins flooding the market if creditors choose to take back ownership of their coins.
The recent problems at Silvergate Bank and the upcoming Ethereum network upgrade (ETH-USD) in Shanghai have created serious headwinds for the crypto market. Silvergate shares (SI) have fallen 95% over the past year and are facing investigations from U.S. regulators over the collapse of clients including FTX and related hedge fund Alameda Research. Meanwhile, Shanghai’s upgrade will enable those who “staked” their ether to withdraw it and potentially sell it on the market again. Such events could increase the Bitcoin supply, further depressing the price.
After hackers stole 850,000 bitcoins in 2014, creditors of the Mt Gox exchange waited nearly a decade for their compensation. However, only some of these funds have been recovered, with creditors being paid just 21% of their original claims. Markets opened the week flat, with bitcoin worth $22,416 and ether worth $1,569, signaling a shift in global sentiment toward digital currencies.
