In July, creditors of Mt.Gox are likely to sell a portion of the returned bitcoins, which will exert pressure on the market, according to analysts at JPMorgan, reports The Block.
On June 24, Bitcoin fell below $60,000 following the trustee of the collapsed exchange’s announcement of plans to begin compensation payments in July. The bankruptcy trustee is expected to distribute assets amounting to 142,000 BTC, 143,000 BCH, and 69 billion yen.
Experts anticipate a potential recovery after the dump in August. The company also suggested that clients of Gemini Earn recently liquidated some of their received assets.
“Looking ahead, in July, Mt. Gox creditors will face a similar downside risk,” JPMorgan clarified.
According to analysts, observing the negative price movement in cryptocurrency, “it is fair to assume that some Gemini users — mainly retail clients — have taken some profits in recent weeks.” Since the asset freeze on the platform on November 16, 2022, the price of Bitcoin has nearly tripled.
This assumption is supported by a minimal decline in JPMorgan’s position indicator on Bitcoin futures based on CME quotes. Meanwhile, in recent weeks, funds have been sold mainly by retail investors rather than institutions, the bank’s researchers added.
In the coming months, compensation payments to clients of the collapsed FTX are also expected to begin. However, the funds will be disbursed in fiat rather than in-kind as with Gemini and Mt.Gox.
JPMorgan anticipates the commencement of payments totaling approximately $14-16 billion following the final approval of the exchange’s winding-up plan on October 7. Analysts believe these funds will support cryptocurrency markets — creditors are likely to reinvest the received money into digital assets.
“While in-kind payments create a risk of liquidations as some creditors intend to take profits, cash payments create a positive impulse […]. The problem for the crypto market lies in the approximately three-month gap between potential Mt.Gox liquidations and FTX clients’ reinvestment,” the experts concluded.
Previously, Sam Callahan of Swan Bitcoin stated that the impact of Mt.Gox payments on the crypto market is exaggerated. Former owner and head of the exchange Mark Karpeles also does not expect mass sales of the distributed bitcoins by the platform’s clients.
Back in May, analysts at K33 highlighted the “bullish nature” of FTX compensations.