5 Reasons Bitcoin (BTC) Will Not ‘Dump’ Due to Mt. Gox

For those unaware, Mt. Gox was an infamous digital asset exchange which rose to prominence between 2010-2014.  After growing to account for a significant portion of the worlds BTC trading volume at the time, the exchange collapsed following a hack.  The result was the theft of significant sums of capital, and the subsequent freezing of whatever remained.  Nearly ten years later, creditors affected by the event still have not been reimbursed for any lost capital.  This may be changing however, as the trustee responsible for facilitating the redistribution of the remaining capital from the defunct exchange, is expected to soon release as much as 140,000BTC.

Naturally, this has some worried, as 140,000BTC is nothing to scoff at.  Will such a large sum being released take a toll on an already floundering market?  Will it add significant selling pressure from creditors looking to recoup past losses, resulting in a further price decline?

The following are a few reasons why this is not a likely scenario, and why any panic currently gripping investors may be premature.

Jumping the Gun

As it stands, there still is no firm date on when an redistribution will occur.  While Twitter fear-mongers would have many believe the event is imminent, and that a dump will ensue, this is simply not the case.  Rather, various creditors and trusted sources have clarified this over the past few days.  For example, Michaël van de Poppe, CEO of Eight Global, tweeted the following.

Such commentary came in response to what is now being viewed as fake news which proliferated across social media, following a hawkish sentiment surrounding inflation, which was shared by the Federal Reserve earlier this week.  Combined, these events resulted in a taxing week for digital assets, and a full retraction of the gains made in previous weeks.

Believers Remain

When the BTC is finally set to actually be released, it would be foolhardy to think that it would all hit the market at once.  It is important to remember that those owed BTC were clearly once believers in what the asset had to offer.  With BTC going on to thrive in the years that followed, turning into what it is today, it is only reasonable to assume that many of those that once believed in Bitcoin, still do.

If this is the case, expect for many to simply keep holding their BTC for the long run – hopefully not on an exchange this time though.

Alternate Assets to Take Some of the Brunt

Whenever distribution does occur, creditors will have the choice of receiving their payout in either Bitcoin (BTC), Bitcoin Cash (BCH), or cash.  This means that any selling pressure which does occur will not be isolated to BTC, minimizing the effect on any one asset.  In fact, some creditors may just use some of their cash payout to purchase more BTC if the price remains suppressed when the event occurs.

With that being said, BCH no longer boasts the relevance that it did a few years ago.  While it put up a good fight in attempting to supplant BTC as the top digital asset, it failed to do so, and has withered away in the time since.  While there will be a few die-hard enthusiasts that remain, any shouldering effect BCH could have on any potential dump would be minimal.

Underestimated Resilience

If a massive influx of BTC into the market does occur, it is important to not underestimate the resilience of digital assets.  As it stands, the value of BTC set to eventually be released represents only a fraction of the trading volume seen on a typical day – this however is assuming that trading volumes are fairly accurate, which may not be the case.  For those that do decide to immediately dump their BTC on the market, the resulting effect may just be white noise in the grand scheme of things.  Bitcoin has weathered much worse than any potential Mt. Gox dump.

A Slow Burn

Finally, even if each of the above points prove invalid, there is another that should minimize the effects of any redistribution – the process will take time.  Many seem to be assuming that the roughly 140,000 BTC will be sent out simultaneously, when in reality, it will be a months long process.  Yes, this may result in a slow-burn that puts extended selling pressure on the market, but it should be negligible in the grand scheme of things, with topics like inflation, regulation, etc., acting as more significant factors.