A decade after the market crash the exchange announces Compensation for coins

CoinNess News Report:
On July 2nd, digital asset data company CCData released its “Outlook Report for the Second Half of 2024”. The report believes that Bitcoin has not yet reached the top of the current bull cycle and may reach new all-time highs this year.
On March 14th, Bitcoin surged above $73,000, hitting a historical high of $73,835. Since then, the price has fluctuated in the range of $58,000 to $70,000. As of the time of writing, Bitcoin is trading at $60,912.
Of particular concern to investors is the recent announcement by Mt. Gox, the Bitcoin exchange that went bankrupt ten years ago, that it will start repaying Bitcoin and Bitcoin Cash (a fork of Bitcoin created in August 2017) to investors starting from early July 2024.
Market concerns arise as users may potentially sell the “regained” digital currency to secure their profits, which may further pressure the rising trend of Bitcoin.
Mt. Gox Repayment is Approaching
On June 24th, Mt. Gox announced that it would begin its repayment plan in July.
Mt. Gox, known as the “Gorge” exchange in China, is headquartered in Tokyo, Japan.
Ten years ago, the exchange was the largest Bitcoin trading platform in the world, accounting for about 70% of global Bitcoin trading volume.
In February 2014, Mt. Gox claimed to have suffered a hacker attack, resulting in the theft of about 850,000 Bitcoins, most of which belonged to users, accounting for 88% or about 750,000 Bitcoins. Based on the exchange rate at that time, the total value of the lost Bitcoins was approximately 11.4 billion yen. On February 28th, Mt. Gox filed for bankruptcy protection with the Tokyo District Court in Japan.
Subsequently, Mt. Gox claimed to have recovered 200,000 Bitcoins. After a long legal process, the court ruled in 2019 to deliver more than 140,000 Bitcoins to a trust for safekeeping and negotiate with creditors to select a repayment plan.
It is worth noting that over the past ten years, the price of Bitcoin has risen from its initial price of $600 to the current $60,000.
The start of the repayment plan means that the “regained” Bitcoins for users, which have been passive investments for ten years and have increased in value by more than a hundred times, will be released.
John Glover, Chief Investment Officer of cryptocurrency lending company Ledn, said that many people’s assets were trapped due to the bankruptcy of Mt. Gox, and this was the best investment they had made. Some people will obviously choose to take the money and run.
Many market participants are concerned that as Mt. Gox creditors are compensated and sell off some of their Bitcoin assets, it may put pressure on the price of Bitcoin.
Lennix Lai, Chief Business Officer of cryptocurrency exchange OKX, believes that the concern about selling may only be short-term because “many early Mt. Gox users and creditors are long-term Bitcoin enthusiasts, and they are unlikely to sell all their Bitcoins immediately.”
According to Jacob Joseph, a research analyst at CCData, the market is fully capable of absorbing the selling pressure, and its impact may have already been reflected in recent price trends.
“According to statistics from relevant analysts, the value of the involved Bitcoins is about $9 billion, which is equivalent to more than half of the Bitcoin ETF inflows, and this may have some impact on the market,” added Zhao Wei, a senior researcher at OKX Research Institute, in an interview with 21st Century Business Herald.
Other industry insiders also analyzed that considering the understanding and expectations of the Mt. Gox incident already reflected in the current price, coupled with the long duration of the compensation plan, the actual impact may be limited.
Post-Halving Expansion Period?
Earlier this year, Bitcoin experienced a strong rally after the U.S. Securities and Exchange Commission (SEC) approved the first Bitcoin spot ETF. It broke through $73,000 in mid-March and has since been relatively weak, fluctuating above $6,000.
Regarding the recent trend of Bitcoin, the digital asset investment company CoinShares analyzed that the price trend is mainly influenced by the Federal Reserve’s recent dot plot, with a median forecast that interest rates will only be cut once for the remaining time in 2024. Although this has little impact on large tech companies, it does affect small and medium stocks and interest rate-sensitive assets such as Bitcoin. In addition, the strong U.S. dollar has weakened the development momentum of Bitcoin.
CoinShares also mentioned that Mt. Gox’s repayment plan may release a large amount of Bitcoin into the market, and the German government has also started selling Bitcoin, which weakens market sentiment. It is worth mentioning that the German government is one of the important holders of Bitcoin. According to the monitoring of on-chain analyst Chainalysis, the address marked as the German government has transferred 78,280 Bitcoins since June 19th, worth about $496 million.
As for the future market, CCData’s report believes that trading activity in the third quarter may decrease, which may lead to more sideways movements in the price. However, the data and previous trends suggest that the sideways price movement will be temporary, and the price is likely to break previous all-time highs by the end of the year.
“During the year, it is highly likely that the price will fluctuate between $50,000 and $70,000. The core influencing factors are the U.S. interest rate schedule and the trading volume of the U.S. Bitcoin ETF,” said Deng Jianpeng, a professor at the Law School of Central University of Finance and Economics, to 21st Century Business Herald.
The report also mentioned that after the fourth Bitcoin halving event on April 19th, the price trend of Bitcoin has remained in a range-bound state for the following three months. Combined with the decrease in trading activity, some speculations suggest that this market cycle has already peaked.
“However, historical trends show that halving events always herald the arrival of an expansion period, with the rising period ranging from 366 to 548 days based on previous data,” emphasized CCData.
The “halving” is an important characteristic of Bitcoin. According to the Bitcoin protocol, the total supply of Bitcoin is 21 million, and approximately every four years, the Bitcoin mining reward will be halved. The main purpose is to slow down the production rate of new Bitcoins and maintain the scarcity value of Bitcoin.
Data shows that in May 2020, the number of new Bitcoins added to the network through virtual “mining” (once every 10 minutes) was halved from 12.5 to 6.25. In April 2024, the mining reward will be further reduced to 3.125. This process will continue until all 21 million tokens are mined, which is expected to occur around 2140.
Regarding the price trend of Bitcoin, Zhao Wei reminded that overall, the price of Bitcoin is usually influenced by various factors such as the macroeconomic environment, regulatory dynamics, industry innovation, and investor sentiment.
Specifically, in terms of the macroeconomic environment, the global economic recovery or recession trends may affect the price of Bitcoin. In addition, the policies of the Federal Reserve are also a core factor affecting price trends. In terms of regulation, countries are currently actively formulating regulatory policies. Although it is still in the early stages and full of uncertainties, as global regulations gradually develop, Bitcoin and the cryptocurrency industry are expected to experience healthy growth. In terms of industry innovation, innovative technologies around the core concept of Bitcoin are gradually penetrating various fields. When these innovative technologies penetrate into people’s daily lives, the cryptocurrency industry centered around Bitcoin may enter a new stage of development.
Ethereum Spot ETF May Launch in July
On the other hand, Bitcoin ETFs have also made significant progress since their launch.
According to data from crypto financial research service provider SoSoValue, as of press time, the total net asset value of 11 Bitcoin spot ETFs in the United States is $53.733 billion, with a historical cumulative net inflow of $14.639 billion. Spot Bitcoin ETFs allow investors to purchase products that track the price of Bitcoin without owning the underlying cryptocurrency.
The launch date of the Ethereum spot ETF has attracted much attention in the market this month. In June, Gary Gensler, chairman of the U.S. SEC, stated in response to related inquiries, “I don’t know the specific time, but progress is going well.” According to media reports, some asset management companies optimistically believe that the SEC may approve the first batch of spot Ethereum ETFs as early as mid-July.
Ethereum was launched in 2015, and its core feature is the application of “smart contracts”. When conditions are met, smart contracts will be automatically executed without any party knowing who the other party to the transaction is, thus eliminating the need for intermediaries.
In terms of total market capitalization, Ethereum is currently the world’s second-largest cryptocurrency. As of press time, the total market value of Bitcoin is $1.2 trillion, while Ethereum is $402.2 billion, about 2.9 times smaller than Bitcoin. Galaxy, a digital asset company, currently estimates that the inflow of Ethereum spot ETFs may be about one-third of the inflow of Bitcoin spot ETFs.
Deng Jianpeng believes that if an Ethereum ETF is launched, it will likely push up the price of Ether, and it may also boost the price of Ethereum Layer 2 tokens. The price increase may also attract more investors and developers to participate in the Ethereum network and stimulate the application of ETFs in other currencies.
Since the beginning of the year, the price of Ethereum has risen from $2,281 to $3,341, an increase of 46%, but the overall trend has been volatile.
SFC
Editor: Liu Xueying
Intern: Li Jie
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