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Analysts' Insights

Analysts' Insights

Bitcoin dropped -8%; here is why

  1. A few hours ago, Bitcoin dropped -8% in a matter of minutes on news that "wallets belonging to Mt Gox and US government are making transactions."
  2. We have analyzed the potential market impact back and forth and do not think this would be a big deal, and the market should be well aware of the (eventual distribution) of those Bitcoins.
  3. Hence our inclination to buy any major dip around those headline tape bombs. At 5:40 am SG/HK (or 5:40 pm NY), we posted an update in our telegram group that "reports of US government seized BTC being moved false." Since then, Bitcoin has been up +3%. The best way to stay ahead of false rumors is to be informed.
  4. Mt.Gox is to start distributing funds to its creditors on March 10, with September 30 set as the deadline for repayments. $1.7 billion in cash, 141,000 BTC, and another 142,000 BCH will be distributed as part of a civil rehabilitation plan, targeting 10,000 customers globally.
  5. Mt.Gox was one of the world’s largest cryptocurrency exchanges that operated from 2010 until it declared bankruptcy in 2014 after a series of hacks that was speculated to have been skimming money from the exchange since 2011. At its peak, Mt.Gox accounted for about 70% of the total Bitcoin trading volume.
  6. The hacks resulted in 850,000 stolen Bitcoin valued at $500 million at the time and worth $17.8 billion today. Only 200,000 BTC has since been recovered.
  7. Mt.Gox had filed for bankruptcy after the major loss which led to a 7.5 year legal battle before a resolution in the form of a rehabilitation plan was drawn up in 2021.
  8. Since not all the stolen BTC could be recovered, only a fraction of the original amount held by creditors will be compensated.
  9. All creditors will receive a base payment with four options to receive the remainder of their deserved funds including 1) early lump-sum repayment (where customers can recover 15-20% of their lost funds), 2) repayment by bank remittance, 3) repayment for a portion of crypto rehabilitation claims in crypto, or 4) repayment through a fund transfer service provider.
  10. When Mt.Gox disintegrated in February 2014, Bitcoin traded at around $550. With Mt.Gox’s payouts at today’s Bitcoin price level of $22,000, customers who had their funds stolen can reclaim their Bitcoin after 9 years with a 3900% increase in value.

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