Despite Mt Gox sell-off, market makers and investors are cautiously optimistic on BTC

Despite the broad sell-off in the crypto market following Mt Gox's moves to pay out its creditors — resulting in over $665 million in daily liquidations — some market makers and investors remain optimistic about bitcoin's midterm prospects.

The amount set to be paid out is “proving to be a burden on Q3,” Co-CEO and co-founder of GSR Rich Rosenblum told The Block.

“It’s almost as much BTC as will be mined in the first year post-halving," he said. "Yet once digested, there is still plenty of time to reach new all-time high before year-end.”

Bitwise President Teddy Fusaro posted on X that despite the current downward pressure on price, “we don't know how many or what % of these coins will ultimately be sold, since distributions of BTC will be made in coin / in-kind.”

Fusaro also pointed to a recent thread by Galaxy's Head of Research, Alex Thorn, whom Fusaro said “expects much of the BTC will be hodl'd.”

Fewer to hit the market than expected?

Thorn dug deeper into the numbers in that thread, speculating that “fewer coins will be distributed than people think & that it will cause less #bitcoin sell pressure than market expects.”

Mt Gox lost 940,000 BTC but only recovered 141,868 BTC, or around 15%, Thorn explained, adding that creditors wishing to be paid out now had to take a 10% reduction and that a substantial portion of these funds were due to be paid back to claims funds. That means the total amount that could potentially hit the market should be less than 141,868.

Since creditors were mainly early adopters of Bitcoin and have already resisted offers from claims funds, Thorn argued, they may be more likely to hold than the market might think.

Mt Gox moved 47,228.7 BTC (about $2.71 billion) to another wallet on Thursday, fueling fears that a large amount of bitcoin could flood the market and cause the price to tumble below $54,000. According to a trustee document published earlier Friday, creditors may have to wait up to three months for repayment, depending on which exchange they made the claims with.