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The article below looks at where the infamous Mt. Gox bankruptcy stands as well as the renewed rumors that its Rehabilitation Plan could negatively impact Bitcoin (BTC-USD) and Bitcoin Cash (BCH-USD) prices. In addition to the past strength of a simple HODL strategy, the Mt. Gox discussion also highlights two takeaways for digital asset investments more broadly:
- The high relative value of a blockchain’s majority chosen fork
- Sound custody arrangements include cold storage and proof of reserves audits
But before moving to Mt. Gox, it is useful to keep in mind that macroeconomic factors currently overshadow any fundamental analysis. Tuesday’s release of the August CPI again proved interest rates and interest rate policy expectations are the majority shorter-term drivers in the digital asset space. Following the release, Bitcoin prices immediately tanked by $1300, close to 6%. And even with The Merge impending, Ethereum (ETH-USD) dropped over 7%.
The headline month-over-month inflation number came in a cool .1% with the key gasoline component down 10.6% for the month. Growth in food prices remained highly elevated at .7%, though the rate has moderated relative to the 13.5% annualized. However, core prices stunned to the high side. All items less food and energy rose .6% in August. This was twice the July rate, which many market participants had looked to as a positive pivot from the extremes of the second quarter. Among the core readings, shelter and medical care services stood out for their high and rising rate of increase.
The upshot, only the most optimistic of Fed watchers now remain hopeful of a .5% increase at next week’s FOMC meeting. And as of Wednesday, CME futures pointed to a 70% probability of a .75% raise in the federal funds rate. Interestingly, the other 30% probability is for a historic full point increase. Importantly, higher rate expectations continue to batter the interest rate sensitive tech sector and risk-on assets.
Mt. Gox Collapse and Rehabilitation
Mt. Gox was a digital asset marketplace launched in 2010. By the time of its collapse in February of 2014 it was responsible for an estimated 70% of the Bitcoin trade worldwide. That month the company revealed it had lost about 750,000 of its customers’ Bitcoins worth at the time between $400 and $500 million. It is believed these coins were stolen via hacks over a period of time, possibly in 2011 and 2012.
Since 2014 there have been complicated bankruptcy and rehabilitation proceedings and multiple lawsuits concerning Mt. Gox’s assets. The addressable assets, which are controlled by a trustee, now primary consists of 100,000 to 150,000 Bitcoins, yen worth about $500 million, and a relatively small amount of Bitcoin Cash.
Of course over this period, Bitcoin prices have gone from a few hundred dollars a coin to nearly $20,000. And though it gets complicated, it now looks likely the majority of the victims, despite the substantial hacks, will be compensated 5-6 times the value of their Bitcoin investments around the point of Mt. Gox’s withdrawal freeze and bankruptcy filing. For perspective, this would be tipple the return of the Nasdaq Composite over the same period.
Bitcoin Dump And Slump Speculation
Thursday, September 15th was an important date for the Mt. Gox rehabilitation in that is started a period of no claims transfers in the leadup to a first base payment for most creditors. This deadline had the de facto effect to limit the ability to make or …….
Source: https://seekingalpha.com/article/4541571-bitcoin-mt-gox-dump-rumor-overblown-but-not-lessons