Analyst points out which cryptocurrency will be most affected by Mt. Gox; It’s not Bitcoin

 

Amid the imminent release of crypto assets from users affected by the bankruptcy of the Mt. Gox exchange, analyst Peter Chung warns of a severe impact on the price of one cryptocurrency in particular. Contrary to what many might imagine, Bitcoin is not the most vulnerable cryptocurrency in this situation.

Mt. Gox, which was one of the world’s largest cryptocurrency exchanges until its bankruptcy in 2014, is set to distribute billions of dollars worth of BTC and BCH to its creditors. The distribution is estimated to include 142,000 BTC and 143,000 BCH, as well as 69 billion Japanese yen (JPY), totaling over $9 billion. The funds are scheduled to be released between July 1 and October 31, 2024.

According to Peter Chung, director of research at Presto Labs, Bitcoin Cash (BCH) is particularly vulnerable to massive selling pressure.

Chung predicts that “100% of Bitcoin Cash will be sold in the short term,” which should result in a sharp drop in price. BCH’s investor base is considered weaker and less committed compared to BTC.

Cryptocurrency vulnerable to Mt. Gox

Chung explains that Mt. Gox creditors will likely treat the BCH payment as an airdrop, selling the cryptocurrency as soon as they receive it. Since the hard fork that created BCH in 2017, its value has been steadily depreciating, and many investors see more sense in converting BCH to BTC or other more stable assets.

BCH has been showing signs of weakness in recent months, with its value falling to levels not seen since March 2024. BCH is currently trading at $342, a significant drop from the $690 it saw in April of this year. The imminent release of funds from Mt. Gox could exacerbate this bearish trend, sending the price of BCH to new all-time lows.

On the other hand, Chung predicts a less drastic impact for Bitcoin. He believes that lenders will hold on to a large portion of their BTC, as many are experienced investors with a strong conviction in Bitcoin’s value.

Additionally, demand for Bitcoin ETFs has been robust, with over $14 billion accumulated since their launch five months ago in the United States. This demand could absorb additional BTC supply coming from Mt. Gox lenders.

In preparation for the release of funds, Mt. Gox has been conducting tests with small transfers between wallets. Today, July 4, the exchange transferred 0.0001 BTC to an active Bitbank wallet. In addition, it sent 0.0001862 BTC to an unknown address and another 0.0001 BTC to a third unknown wallet. These tests indicate that the distribution of funds is close to starting.