Bitcoin Outflow Clarification from Mt. Gox

During the past day, several movements from wallets associated with the bankrupt cryptocurrency exchange Mt. Gox have been spotted on the Bitcoin blockchain. The platform had announced plans to repay its creditors, so the transactions are likely related to them, although its former CEO Mark Karpelés assured on Tuesday that it was not yet the case.

Karpelés went on to X and tweeted, "Everything is fine with Mt. Gox. The (Mt. Gox) trustee is moving coins to a different wallet in preparation for the distribution that will likely happen later this year. There is no imminent sale of bitcoins happening."

However, Mt. Gox's BTC transfers added selling pressure across the crypto market, causing BTC to drop by about 4% in 24 hours.

Before being hacked in February 2014 by cybercriminals who stole 840,000 BTC worth $460 million, Japan-based Mt. Gox was the most prominent Bitcoin trading platform.

In 2019, a Tokyo District Court ruled that Karpelés was guilty of wrongfully making electronic records connected to Mt. Gox's books, as recounted by Decrypt.

However, the same court found the former CEO was not guilty of embezzlement or breach of trust, and after keeping a clean record for the four years following his sentence, Karpelés avoided prison.

Today, ten years later, Mt. Gox is working to pay back its customers who left money at the exchange.

Analyst's Perspective

Analyst James Van Straten discussed this in an X post. He provided perspective on how a potential selloff arising from these repayments would compare against another that BTC witnessed recently.

The distribution event in question is from the long-term holders (LTHs), which make up one of the two main divisions of the BTC market based on holding time.

All investors holding onto their coins since more than 155 days ago qualify for this cohort, while those who bought within the past 155 days are put in the short-term holder (STH) group. The LTHs are considered the stubborn side of the market, as they rarely participate in selloffs.

Market Absorption Capacity

The recent rally in the asset proved to be enough to move even these HODLers into selling. As the graph shows, the LTH supply has been moving sideways in the last couple of months, but it was in a state of decline for five months before that. In this selloff, the LTHs sold around 1 million tokens, of which around 340,000 BTC was linked to GBTC outflows.

At the same time, this distribution from the LTHs occurred, though the coin's price marched to a new all-time high, implying that the market could absorb this massive selling pressure just fine. Straten notes that the Mt. Gox repayments are only about a tenth of this selloff, and not everyone who will get these tokens will decide to sell.

According to blockchain 'de-anonymizing' platform Arkham, Mt. Gox has moved roughly $9.66 billion worth of BTC to three newly created wallets in four batches per address. While there was initial worry that the exchange was considering liquidating its coins, former Mt. Gox CEO Mark Karpelès clarified on the social media platform X that the coin movements were only preparations for a distribution likely to happen later this year.

Thus, given this fact, it's possible that Bitcoin may not be affected by this distribution if demand for the cryptocurrency remains as strong as it has been recently.