After many years, the time has finally come: the Bitcoins that were recovered from the collapsed Mt. Gox exchange will soon be returned to users. The market is not so happy about this.

Oops. That was a candle, unfortunately in the wrong color, not cheerful green, but bitter red. Within a few minutes, the Bitcoin price fell from 63,000 to 61,000 dollars, and over the course of a few hours even from 64,000 dollars, i.e. by around five percent.

Such movements rarely happen without reason, but rarely has the reason been so obvious: The bankruptcy administrator of Mt. Gox has, after years of waiting, announced the payout of the recovered Bitcoins (as well as Bitcoin Cash).

After the administrator of the exchange, which went bankrupt spectacularly in early 2014, managed to recover around 141,000 Bitcoins, he prepared “the repayments of Bitcoin and Bitcoin Cash”. This process took so long, with dozens of emails and announcements, that one could almost believe it would never be completed. But “now these preparations are complete and the administrator will initiate the repayments in Bitcoin and Bitcoin Cash”. This will happen as early as July 2024.

According to current prices, 141,000 Bitcoins are (still) worth almost nine billion dollars. This amount was withheld from the market for more than ten years because it was sitting in the wallets of the bankruptcy administration, which, when it comes to the amount of money, is not much different than a relatively large ETF. Of course, Microstrategy holds more with more than 200,000, Blackrock with a good 300,000 and Grayscale with almost 280,000 Bitcoins. But even Fidelity, publisher of one of the largest Bitcoin ETFs, is not that far from the sum of the Mt. Gox coins with 168,000 Bitcoins.

141,000 bitcoins currently equates to more than what bitcoin miners mine in 10 months; it’s almost as much as the halving reduced the annual production of new bitcoins. It’s one of those amounts that is too large to actually be priced in, a factor with a similar hard, fundamental relevance as a rise in interest rates. It’s hard to imagine that it won’t affect the price, not just through the red candle of the announcement shock, but on a deeper, mechanical, more viscous level.

Whether and how it will happen, however, depends largely on how the people who receive bitcoins deal with them. Many will be early adopters who traded on Mt. Gox in 2013 or earlier, and only a few of them will have left all their coins on the exchange. It is safe to assume that they do not need the repayment to pay their rent, and that many of them are probably happy to just keep it in their wallet. But all of this is open and will slowly become clear from July onwards. What is clear, however, is that a new, rather negative factor arrived today that will almost inevitably shape the market.

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