Mt. Gox may release 150,000 Bitcoin into the market drastically increasing the downward pressure

  • Mt. Gox's Trustee to submit the rehabilitation plan by December 15.
  • The potential distribution of 150,000 BTC may lead to panic selling.

Mt. Gox was an infamous Japanese cryptocurrency exchange that went broke in 2014, leaving its users penniless. After years of legal battles, Trustees appointed by the Tokyo District court are set to distribute about 150,000 BTC among its creditors. They were supposed to submit the rehabilitation plan in February 2019 and start compensating creditors for losses; however, the court has repeatedly moved the deadline upon the request from the Trustee.

December 15 is the latest deadline in the Mt. Gox rehabilitation process. By that date, the Trustee shall provide the rehabilitation plan and distribute 150,000 from the company's wallet to compensate users for losses. 

Bitcoin on the verge of a massive sell-off

As the story goes, the injection of such a colossal amount of Bitcoins now worth over $2.85 billion may lead to a sharp sell-off as Mt. Gox users might rush to cash out on their assets. Even if some of them sold their debts to third parties, and some decided to hold the coins, the selling pressure is going to be enormous.

The catastrophe won't happen overnight, as the plan still needs to be approved by the court, and the distribution won't start immediately anyway. However, the fact that the Mt. Gox saga moves from the sticking point and enters its final phase may become a strong bearish signal for the market. 

As noted by on-chain analytics resource CryptoQuant, multiple creditors who lost money in the Mt. Gox debacle were forced to wait for their money for years. No wonder if they are tempted to sell them for profit, even at the risk of crashing the market. 

The market is ripe for a correction

Last week was characterized by low trading activity and range-bound trading. Once BTC hit a new all-time high and attempted to break above $20,000, the volatility subsided, and the coin entered a period of consolidation. 

As FXStreet previously reported, Bitcoin's long-term picture implies that the market is ready for a deep bearish correction with a potential target at $13,000. 

Technically speaking, the TD Sequential indicator has presented a sell signal, in the form of a green nine candlestick, on the monthly chart. If the bearish formation is confirmed, we may see a sell-off for one to four red candlesticks with the critical support created by a significant upside-looking trendline at $13,600. Note that the previous sell signal appeared right before the major collapse that resulted in the crypto winter.

BTC monthly chart

BTC monthly chart

Mt. Gox rehabilitation plan may serve as a critical bearish trigger that will set the ball rolling. However, if the deadline is delayed for another month or two, a relief rally may push the price towards the recent ATH and allow BTC to test the psychological $20,000. Additionally, new institutional players like MicroStrategy might enter the market soon, increasing their cryptocurrency exposure.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Cryptos feed

Latest Crypto News

Latest Crypto News & Analysis

Editors’ Picks

XRP constricts before breaking out to $1

XRP showed strong signs of recovery after the shock of this past Saturday’s flash crash wore off. The past three days of congestion after a strong rally from the lows may begin a new uptrend for XRP.

More Ripple News

Ethereum in a pennant, with bullish breakout as tailwinds reemerge

Ethereum (ETH) price has formed a pennant that quit rapidly after the big sell-off during the weekend. Between $4,646 and $4,060, the price ranges from lower highs and higher lows. 

More Ethereum News

Bitcoin needs support to hold, so that bulls can reclaim $50,000

BTC saw bulls attempting to pair back a significant piece of the occurred losses from last Saturday. But bulls have hit a curb after reclaiming $50,000, as price action fades below and tests the first real support for further downside. 

More Bitcoin News

Cardano price in phenomenal buying zone as ADA targets $3

A brief technical and on-chain analysis on Cardano price. Here, FXStreet's analysts evaluate different patterns and indicators that suggest ADA is primed to advance further.

More Cardano News

The bull and the bear case for BTC

Bitcoin price saw a recent bullish impulse that faced massive headwinds before it tagged a crucial psychological barrier. With directional bias and choppy price action, BTC is likely to experience massive volatility as the situation resolves over time. 

Read full analysis