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THE long-anticipated distribution of around US$8 billion in Bitcoin from the failed Mt Gox exchange is leaving the crypto market in a state of suspense even after it has begun.
On Friday (Jul 5), Mt Gox’s trustee announced that he “made repayments in Bitcoin and Bitcoin Cash to some of the rehabilitation creditors.”
The trustee has moved hundreds of million of dollars of tokens early on Friday Eastern time to Bitbank and to other Mt Gox accounts, according to blockchain researcher Arkham Intelligence. The trustee said payments to other creditors will be made “promptly” once their details are confirmed. Many creditors are expected to receive repayments by the end of October.
The lingering uncertainty helped to drive Bitcoin lower for a fourth day, with the price reaching the lowest since February.
The potential supply overhang adds to concern over potential selling by governments such as Germany, creditors of the failed exchange and beleaguered crypto miners.
That is even though many creditors have not received their distributions yet, and the current stage of repayments may stretch out into October, according to creditor Brian Dixon, chief executive officer of Off the Chain Capital.
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“We are still waiting on our distributions,” Dixon said. “I haven’t heard of anybody actually receiving the Gox claims yet.”
Tokyo-based Mt Gox was once the world’s biggest Bitcoin exchange before it was hacked and then went bankrupt in 2014.
Many early Bitcoin supporters kept their money there, and have been waiting to get their coins back for 10 years. Gox had started repaying fiat earlier.
The price of Bitcoin has fallen around 6 per cent this week to about US$56,400. It briefly touched US$53,602 earlier Friday.
High interest rates and cooling hype for Bitcoin exchange-traded-funds have both driven prices down. Helping to fuel the decline was low levels of liquidity because many US market participants are off around the Jul 4 holiday.
Traders may be overreacting to the Mt Gox repayments, according to Stephane Ouellette, chief executive of FRNT Financial. The German government’s potential liquidation of the US$2.3 billion Bitcoin poses a much greater immediate threat to the market, he said.
“Not every Bitcoin they distribute is going to be sold,” Ouellette said.
“The market is struggling for a narrative while bulls on Bitcoin are licking their chops right now and hoping this is going to be a great buying opportunity.” BLOOMBERG
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