The Tokyo digital currency exchange, Mt. Gox became defunct and a trustee sold off approximately 35,000 Bitcoin at a value of $400 million to pay off creditors, according to documents published last week. This large quantity of the digital currency being liquidated has most likely had an effect on the price of Bitcoin, most notably the tumble it took between March 5th and March 9th, from a high of $11,570 to a low of $8,577 according to CoinMarketCap. The sell-off is now on pause, and investors are turning bullish with the news, according to an article on CNBC.
According to the English translation of the Mt. Gox announcement, MtGox Co., Ltd. Filed for bankruptcy, with Nobuaki Kobayashi, Attorney-at-law, as the bankruptcy trustee. On November 24, 2017, a number of the creditors of the company filed a petition with the Tokyo District Court for the commencement of civil rehabilitation proceedings. As a result, the bankruptcy trustee sold off a portion of the company’s BTC and BCC holdings, making an effort to attain as high a price as possible.
The total amount of BTC managed by the bankruptcy estate as of March 5, 2018, was over 166,344 BTC, worth approximately $1.5 to $2 billion USD. While this amount is substantial, the document does raise the question as to whether some of the BTC or other cryptocurrencies that were considered under the control of the bankrupt entity have somehow disappeared.
Mt. Gox shut down in 2014 and filed for bankruptcy after the theft of 850,000 Bitcoin. The remaining 166,000 Bitcoin represents a substantial amount of cash and as such, trustee Kobayashi requested regulatory approval for liquidation. Upon news of the pause in liquidation pending feedback, a number of investors have bullishly tweeted about the delayed court action.
Good news is that, the next court proceeding for Mt Gox bankruptcy won’t happen until Sep 18, 2018. Before then, Nobuaki Kobayashi will not have authorization to dump the remaining 160k #Bitcoin $BTC on open market.
— Coin Panda (@8bitandstuff) March 10, 2018
There are two possible outcomes. If indeed the liquidation sale is put on pause, then we may see the demand for Bitcoin outweigh the supply, and drive the price up. If this is not the case, then it’s possible that the remaining liquidation supply will drive prices down temporarily once it enters the market. A savvy investor would follow this news, and may wish to acquire more Bitcoin during such a dip.
This is not financial advice, but we’ve already seen a partial recovery in Bitcoin prices, as well as those other cryptocurrencies that tend to move when Bitcoin moves. Bitcoin is back up over $9,000 after hitting a temporary low of $8,513. Time will tell if it climbs back up to the $12,000 range, breaks through resistance and finds its way back up to $20,000 and beyond. In the meantime, we may at least see some stabilization across the entire digital currency market, as some coins are already moving in a positive direction. A quick look at the homepage of CoinMarketCap reveals that several coins, like NEM (XEM), VeChain (VEN) and others have been making healthy gains, complimented by some moonshots like Binance’s coin, BNB jumping from $8 to over $12 on March 13.