UBS Strategists Rebuff Fears Of Bitcoin Crash Due To Mt. Gox Repayments

UBS UBS has issued a report stating that concerns over the release of large amounts of Bitcoin BTC/USD onto the market as a result of the Mt. Gox bankruptcy repayments are overdone.

While creditors of the now-defunct cryptocurrency exchange are set to recover some of their funds after a decade-long liquidation process, the rehabilitation plan offers them several options on repayment and timing.

According to the UBS report, the most important choices for creditors include taking an early lump sum or waiting for further proceedings and asset recoveries, as well as receiving the funds in fiat or crypto, Coindesk reported.

However, the strategists noted that "the early lump-sum option with fiat repayments suggests that the exchange would have to sell Bitcoin to raise the requisite cash," which has previously fueled concerns over potential negative impacts on Bitcoin's price.

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Despite 850,000 Bitcoin going missing from the exchange in 2014, only a fraction of that amount is being potentially disposed of, as the exchange has recovered 142,000 Bitcoin, 143,000 Bitcoin Cash BCH/USD, and 69 billion Japanese yen ($510 million), which amounts to around 20% of the hack.

Nonetheless, UBS acknowledges that there is a possibility for the repayments to affect the price of Bitcoin, as the amount of Bitcoin represents about 90% of the average supply active within the last day and 28% in the last week.

The bank also notes that active supply increases are typically associated with weakness in the Bitcoin price.

However, UBS emphasizes that the reality is likely to be much less dramatic, as many early adopters of Bitcoin are still believers in cryptocurrency.

The bank cites recent reports indicating that two of the largest creditors, with a combined share of claims of 20%, have opted for the crypto payout, suggesting that new supply to the market could be less concentrated.

The report further states, "Such news could have been an additional factor for BTC's surprising resilience of late."

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