Bitcoin Drops as Billions in MtGox Holdings Are Moved

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  • MtGox’s creditors have moved closer to partial redemption after nearly all 140,000 bitcoins were moved overnight
  • The bitcoins, worth $9.4 billion, have been transferred to an unknown wallet, presumably ahead of repayments to creditors who opted for crypto payouts
  • Bitcoin has fallen $2,000 as fears have risen that recipients might sell their coins and crash the market

MtGox’s long-suffering creditors appear to be a huge step closer to partial redemption after nearly all the 140,000 bitcoins held by the trustee were moved overnight. The haul, today worth $9.4 billion, was moved from a MtGox-registered wallet to an unknown wallet preparatory to making repayments to the tens of thousands of creditors who opted for crypto payouts rather than cash. Bitcoin fell $2,000 as the news filtered through, with the move stoking fears that recipients might all sell their coins and crash the market.

Ten-year Wait Appears to be Coming to an End

MtGox creditors have been waiting for their money back ever since the exchange collapsed in February 2014, but it has taken ten agonizing years to get to this point. Last September the repayment deadline was pushed back to October this year for crypto payouts, while cash payouts began last December.

After a decade of waiting, it finally seems that bitcoin payouts are on the horizon, with blockchain data showing a steady outflow of bitcoins from the trustee-held wallets to an unknown third-party wallet:


Concerns that the trustee had been hacked were quickly eased given the pattern of the outflows, although with official confirmation still yet to arrive, nerves are naturally taught. In one MtGox creditor chat room, concerns ranged from a hack to the trustee, Nobuaki Kobayashi, sending the coins to the wrong address.

Crash Fears Stoke Crash

There have been long-running fears that Bitcoin would react negatively to such news, and Bitcoin’s reaction has backed that up. One of the primary worries is the sheer volume of Bitcoin that will enter the market, with some concerned that a significant number of the 20,000+ creditors will sell their Bitcoin upon receipt, flooding the market with a large supply, potentially driving prices down.

This anticipated influx can, as we have already seen, create a psychological impact on paperhanded holders. The mere expectation of MtGox coins coming into the market has clearly led to negative sentiment, prompting traders to preemptively sell their holdings to lock in current prices before a potential drop occurs.

However, it must be remembered that the coins will not all be sent out in one flush; the transfers will be staggered so that the trustee can monitor them, and the assumption that many holders will simply sell in the middle of a bull market is unfounded.

It seems, then, that the fear of a MtGox-related Bitcoin price drop is, ironically, the thing causing the price drop.