The crypto world continues to brace through a potentially seismic event as Mt. Gox, the infamous Japan-based Bitcoin exchange that collapsed in 2014, distributes approximately 140,000 Bitcoin (BTC) to its creditors. This long-awaited resolution to one of crypto's most unfortunate incidents has sparked intense speculation about its possible impact on Bitcoin's price and the broader cryptocurrency market.

The distribution, which began roughly two weeks ago, marks the culmination of a decade-long legal battle. According to recent media reports, nearly half of the total 141,686 BTC has already been redistributed to creditors, with the remaining coins expected to follow suit in the coming weeks. This influx of Bitcoin, valued at over $9 billion at current prices, represents a significant injection of liquidity into the market.

Why many Bitcoiners are concerned

You would think such a large-scale digital currency dump would cause the crypto asset’s price to plummet as long-suffering investors sought to cash in on the estimated 8,500% value appreciation Bitcoin has realized since the collapse of the Mt. Gox exchange.

Ironically, with more than 41% of the settled Bitcoin distributed to creditors the on-chain trading data per Glassnode shows that volume and price have been moving between a typical range of $66,000 and $68,000 throughout the initial distribution phase. This stability suggests that the feared sell-off may not happen as conventional wisdom expected.

One of the possible contributing factors cited in the Glassnode data was that many of the Mt. Gox creditors chose to receive their settlement funds in Bitcoin rather than fiat currency. The report noted that such a decision was a novelty under Japanese bankruptcy law, and it implies those creditors intend to remain Bitcoin asset holders.

Bitcoin’s remarkable bounce back abilities

"While short-term selling pressure is expected, this could be good news for the wider market in the mid-to-long term as the fear of 'Mt. Gox Bitcoins' finally fades from the market," said Andrei Grachev, Managing Partner at DWF Labs.

Grachev draws a parallel to the recent sale of 50,000 BTC by the German government, which was quickly absorbed by the market without triggering a prolonged downturn.

Additionally, the current market dynamics suggest a broader trend towards holding Bitcoin for the long term. Per the Glassnode data outlined in the chart below, more than 65.8% of the Bitcoin supply has been inactive for over a year, with 54% remaining dormant for more than two years. This "HODLing" behavior, as it's known in crypto circles, could help mitigate the impact of any sell-offs resulting from the Mt. Gox distribution.

Bitcoin ETFs could be buyers

Another factor that could lessen the punchdown on Bitcoin price is the possible role of institutional investors seeking to hoover up the loose assets. "Top spot Bitcoin ETFs have recently acquired huge amounts of the asset and they could be gunning to add even more to their assets under management," said Grachev.

With Bitcoin ETFs currently managing more than $60 billion in blockchain assets, the potential influx of Mt. Gox outflows could present an attractive opportunity for fund managers to boost their Bitcoin holdings at a possible bargain.

At the same time it’s important to remember that the cryptocurrency market is affected by geopolitical factors beyond just Mt. Gox. Specifically, Grachev highlights the upcoming U.S. Presidential elections as a key factor that’s likely to shape Bitcoin's price action and the broader crypto market in the long term.

Impact of Mt. Gox settlement on alt coins

While the immediate impact of the Mt. Gox distribution appears to be less volatile than many feared for BTC, no one knows how it will play out for the broader crypto space. One of the positives for alt-coin holders is the gradual distribution method that the courts ordered for the Gox payout. The staggered settlement seems to be giving the market time to absorb the supply more smoothly without massive sell-offs.

In fact, once the Mt. Gox payout is over; it could actually serve as a growth trigger within the crypto space by removing its dark cloud. "We could see a similar result once Mt. Gox distributes its assets to creditors, which could probably lead to Bitcoin finally breaching the $100,000 mark and the crypto market finally testing all-time highs," he speculates.

Mt. Gox is a testament to investor tenacity and Bitcoin resilience

All eyes will continue to focus on Bitcoin's price action and overall market sentiment until all the Gox coins are flushed. While near-term volatility can always happen within the crypto sphere, Bitcoin’s bounce back ability in the face of the recent Germany sell-off and Gox payouts is remarkable.

For OG Bitcoiners, the Mt. Gox distro signifies more than a possible market catalyst. It's the closing of one of crypto’s darkest chapters when Bitcoin’s future was at its most vulnerable and thousands of investors were discouraged and disillusioned. This settlement is a true testament to their perseverance and determination against all odds. As well as their dogged belief in the strength and resilience of arguably the hardest asset on the planet.