Japan’s Mt. Gox crypto exchange has been dead for eight years – theft, malfeasance, and stupidity killed it. On its way down, it took more than 850,000 of its users’ Bitcoins into digital limbo.
The company’s administrators, appointed by the Japanese courts and hordes of lawyers, have managed to recover around 140,000 BTC in the years since.
And they’ve opened the door for jilted user-creditors to file claims to get at least some of their Bitcoin returned from that big stash.
It’s taking a long time, an eternity for the folks who are owed money. Vocal creditors, understandably cheesed off, have publicly speculated that the payout won’t come, or the full 140,000 BTC won’t be paid, but they’re talking out of school.
The deadline for filing claims has been pushed and pushed back again, but the deadline is coming.
That Bitcoin will be paid out and, one way or another, in early 2023 it will hit the market – “in play.”
And that’s going to be big a really big deal for people who own Bitcoin, who want to own Bitcoin, and even for people who want to sell Bitcoin.
The Mt. Gox Payout – A Long Time Coming, Impossible to Ignore
The 850,000 lost Bitcoins were worth a “mere” $473 million at the time Mt. Gox went under in early 2014.
At today’s prices, though, the 140,000 recovered Bitcoins are worth a cool $2.7 billion. And I think, when the payout comes in early 2023, a ton of them are going to be sold off at once.
It’ll be like a freight train hitting the market. It will almost certainly go down. It’s got less to do with the quality of Bitcoin and more to do with human nature.
Many, if not most, of Mt. Gox users are theoretically millionaires. These folks bought into Bitcoin for a few bucks or, at most, a few hundred bucks – well under $1,000 – and have been riding it up ever since.
Only it’s been a hellride for them because they haven’t been able to touch their money. They were forced to miss out on $5,000… $10,000, $15,000… $69,000. I mean, the odds are very good that some people actually died with their Bitcoin held up in the Mt. Gox debacle, meaning they never got the chance to touch their fortune, and they never will.
And when the Mt. Gox payout hits wallets next year, many, many of those users are going to want to get liquid and sell out. Plenty of these folks will have no interest whatsoever in HODLing. It’s possible quite a few of them will never have to work again once they cash out their still impressive 19X gains.
And I can’t say I blame them. Not one bit. I wish them the best – they’ve been through an absolutely infuriating, needless ordeal and now, for a lot of folks, the end is finally in sight.
As for the rest of us, well…
How This Payout Will Impact Bitcoin – and What to Do About It
It’s worth repeating, this has zero to do with the quality of Bitcoin as an asset. It won’t define Bitcoin in the long term. But the selling is going to happen, and it’s important not to let it surprise you.
In fact, savvy players know it’s coming and are sharpening their knives to nab Bitcoin and the best possible price. Institutions, whales, and now you, are prepared for this.
I envision this selling unfolding in one of two ways.
One, it will happen all at once. The Mt. Gox payout will hit creditors’ wallets and they’ll turn around and dump it directly on the market. That selling would be… intense.
Or, the Bitcoin could hit the market in a slower, more orderly fashion, in which case the selling will be less intense, but drawn out over a longer period of time.
It’s the difference between walking down stairs or falling down a cliff, dropping one 10,000-pound weight or 1,000 10-pound weights. The end result is the same, but the experience is different.
Either way, it’s hard to imagine Bitcoin making a sustained run at highs until the Mt. Gox payout is behind us. In fact, because Bitcoin is the bellwether for crypto, the entire market might be subdued until this happens.
I would definitely not sell into this event, even though it will be scary. At the same time, I’m putting my “BTFD” mantra on pause, too – not necessarily jumping at every dip in price. But, sit tight, think about the insane long-term gains you’re going to realize, and wait for this to pass.