Bitcoin Rebounds 5% as Analysts Argue Mt. Gox Fears Are Overblown

Investors can breathe a sigh of relief as net inflows in U.S. spot Bitcoin ETFs exceeded net outflows to the tune of $31 million for the first time in two weeks, according to data analytics platform SoSovalue.

This newfound vote of confidence in Bitcoin from institutional investors has coincided with the Bitcoin price recovering from $59,495 to $61,485 at the time of writing, an increase of 3.5% after Bitcoin breached the $60,000 mark on June 25.

Fidelity’s FBTC fund saw the highest inflow of $49 million, while Bitwise’s BITB fund witnessed an inflow of $15 million. Meanwhile, Grayscale’s GBTC fund registered the highest outflow of $30 million.

Bitcoin ETFs saw a major sell-off as net outflows stood at $714 million in the previous five trading sessions. The sell-off intensified on June 24, as Mt. Gox trustees announced that Mt. Gox creditors would start receiving reimbursements from next week.

Another factor in Bitcoin’s price increase is likely derivatives liquidations. Nearly $62 million worth of shorts have been liquidated, which accounted for the vast majority of the total liquidations that took place in the past 24 hours.

A trading desk note from Off the Chain Capital shared with Decrypt hints that Mt. Gox creditors, who will start receiving reimbursements from next week, might not be too keen on parting ways with their decade-old holdings.

“Once the Mt. Gox distributions are made, I believe the market will generally not start dumping the assets right away because I don’t see as many claim holders selling their Bitcoin once received as may have happened if they received it several years ago,” Brian Dixon, CEO of Off the Chain Capital, wrote in the note. 

The reason, he added, is that Bitcoin has matured considerably since Mt. Gox filed for bankruptcy in 2014. 

“A claim holder must ask themselves if they need this cash for something, or if it’s better to hold Bitcoin as a long-term store of value," Dixon wrote, adding that BTC has been the best-performing asset for 12 of the last 15 years.

The sentiment was echoed by Alex Thorn, Head of Research at Galaxy Research.

“Creditors have been stuck in Mt. Gox bankruptcy for 10+ yrs--finally trustee says in-kind distribution of #BTC #BCH will begin in July. We think fewer coins will be distributed than people think & that it will cause less #bitcoin sell pressure than market expects,” Thorn tweeted.

In a follow-up tweet, Thorn stated that individual creditors are unlikely to sell their proceeds as they are long-term holders and noted that they’ve had the option to sell their claims for the better part of a decade. He added that selling their reclaimed BTC would also incur a significant capital gains tax for U.S. creditors, as Bitcoin has shot up substantially in the past decade.

Edited by Stacy Elliott.