What lies ahead for the cryptocurrency market as Mt Gox initiates payment proceedings

The trustee of the now-defunct Mt.Gox exchange, which declared bankruptcy in 2014, has revealed plans to initiate compensations in Bitcoin, Bitcoin Cash, and cash by early July.
Mt.Gox Bankruptcy
Payout of $9 billion in Bitcoin
What analysts are saying
What to expect for Bitcoin in July?
The decision to move forward with payments was finalized after completing the necessary technical support, adhering to regulations in various countries, and coordinating transfers with each crypto exchange.
Compensations will be disbursed on a first-come, first-served basis to platforms that have verified the required information.
The market responded nervously to the announcement, with Bitcoin (BTC) dropping below the $62,000 mark. This decline in BTC value caused a ripple effect, leading to decreases in the prices of other cryptocurrencies within the top 10 by market capitalization.
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Mt.Gox Bankruptcy
Mt. Gox was once a prominent crypto exchange, operating from 2010 until its collapse due to hacking attacks in 2014. At its peak, Mt. Gox facilitated around 70% of the total Bitcoin trading volume. In a 2014 hack, 850,000 BTC were stolen, now valued at over $57 billion.
The process of agreeing on compensations for the defunct Mt. Gox exchange commenced in June 2018. In 2021, a court approved a compensation plan put forth by the exchange’s trustee.
In December 2020, a plan was introduced to compensate creditors in fiat money, Bitcoin, and Bitcoin Cash (BCH). The plan details were disclosed in January 2021 and received court approval in February for further review. Approximately 83% of exchange users supported the compensation plan.
The exchange’s bankruptcy led to a legal battle lasting seven and a half years before a compensation plan was established in 2021. Since not all stolen coins were recovered, customers will only be reimbursed for a portion of the initial amount – 142,000 BTC, 143,000 BCH, and 69 billion Japanese yen.
In December 2023, Mt. Gox customers reported receiving money a decade after the collapse. Following posts on social media by anonymous users claiming to have received funds, the price of Bitcoin dropped by 4.5%.
By the end of May, the Bitcoin price fell to $67,500 after news broke about the movement of Mt. Gox’s assets amounting to approximately $3 billion, intended for compensating clients of the bankrupt exchange. Market participants fear that once exchange clients receive billions of dollars in compensation, they may start selling them, affecting the market.
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Payout of $9 billion in Bitcoin
Bitcoin experienced a 3% drop after the manager of the Mt. Gox exchange announced plans to initiate compensations in early July. The price of the leading cryptocurrency fell below $58,000 but recovered above $61,000 at the time of writing.


Source: CoinMarketCap
Despite concerns surrounding Mt. Gox’s Bitcoin payouts, there could be broader reasons for the volatility in the crypto market. The news of bitcoins being distributed to lenders coincides with an outflow of investments from bitcoin-traded funds. Capital losses from regulated crypto funds surpassed $500 million for the second consecutive week, marking the highest figure in two weeks since the introduction of spot Bitcoin ETFs in the U.S.
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What analysts are saying
According to James Butterfill, chief analyst at CoinShares, the swift movement of funds from funds indicates the beginning of a significant correction.
Caroline Mauron, co-founder of digital asset derivatives liquidity provider Orbit Markets, echoed his sentiments, stating that bearish sentiment is prevailing and the market is struggling to absorb large sell orders.
Others view this market behavior as a short-term correction at the onset of a bullish market. Adam Back, head of Blockstream, questioned why creditors had to wait ten years for compensation.
In May, Galaxy Digital estimated that 75% of the coins returned by the platform trustee were claimed by owners who opted for early discounted payments in kind.
While the market may anticipate that almost all of the 141,868 BTC will circulate this year, analysts suggest that the actual amount will be considerably lower. It is projected that 64,697 BTC will go to individual creditors, with an additional 30,000 BTC distributed to claim funds and participants in a separate bankruptcy.
Alex Thorn, head of Galaxy Research, clarified that out of almost 65,000 BTC, 20,000 lenders are early adopters of digital gold who historically held onto their Bitcoin, with 11% of the supply unmoved for over five years.
The expert noted that the majority in this category purchased Bitcoin at $451 or below, remaining steadfast holders despite multiple bear markets over the past decade.
What to expect for Bitcoin in July?
According to Mark Cullen, Bitcoin is likely to continue its decline in July, with a potential drop to new local lows. He foresees a possible decline in Bitcoin to $57,000 early in the month, noting a liquidity pool at that level that could influence the crypto rate.
Trader Doctor Profit also predicted a Bitcoin drop to $57,000, believing that BTC is nearing a local low, with a subsequent rally to new highs.
The trader suggests utilizing the current downturn to acquire bitcoins at discounted prices.
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