Mt. Gox\'s (Mentougou in Chinese) 138K BTC Payout Could Lead to a Bearish Bitcoin Market

Concerns mount as Mentougou's 138K BTC payout could lead to a bearish Bitcoin market, influencing market dynamics significantly.

As Mt. Gox prepares to repay its creditors in Bitcoin (BTC), concerns are mounting over the potential impact on the cryptocurrency market, given the exchange's vast holdings.

According to a report by Cycle Capital, the speed at which Mt. Gox sells these assets will largely determine the market's response. If the compensatory sales are carried out quickly, similar to the recent $2.5 billion sale by the German government, it could lead to a further market decline.

The report highlights that the present market inflows aren't sufficient to fully counteract the effects of a larger Bitcoin drop. For instance, despite seeing demand for five days in a row, Bitcoin exchange-traded funds have only seen an infusion of more than $880 million.

"This scenario illustrates the market's sentiment. However, according to the analysts at Cycle Capital, the rate of new inflows into Bitcoin ETFs will not be enough to offset the possible liquidation following Mt. Gox repayments."

The report further notes that with approximately 138,000 BTC in Mt. Gox reserves, repayments spread out over a month may result in more than 4,300 BTC hitting the market per day. Some exchanges received a few hundred Bitcoins when the German government began its selloff of the cryptocurrency. A negative mood in the market was swiftly induced by this.

So, the Mt. Gox compensation might exacerbate the market's fear, uncertainty, and doubt (FUD) caused by the government's liquidation. Creditors of the defunct exchange have been waiting ten long years for their Bitcoin holdings, which can cause panic selling as a result of desperation.

On the other hand, Coingape elaborates that daily Bitcoin offloading would be better handled if Mt. Gox extended the payout process by two or three months. Though this strategy may forestall a Bitcoin meltdown, it also has the potential to dampen temporary price increases. The result might be a "boring" prediction for the market going forward.

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