Is MtGox Behind Stalling Price Movement of Bitcoin?

As the price of Bitcoin appreciated in November, there were hopes that the leading crypto may finally break its record high set three years ago.

Those hopes were dashed as BTC tried and failed repeatedly to breach its old high. At the same time, the recurring issue involving MtGox popped up again. This time there are claims that the saga which has lasted over six years may finally be over. So, what are the links between MtGox and the falling price of BTC?

What is MtGox?

Mt. Gox was a Japanese cryptocurrency exchange platform that operated between 2010 and 2014. MtGox which means Magic: The Gathering Online Exchange was created by Jed McCaleb (2007), as a place for enthusiasts of the popular card game to hang out and trade cards.

In 2010, Jed McCaleb got into cryptocurrency (Bitcoin), and people began trading cards using BTC on the platform. From there it grew to become a cryptocurrency exchange. At the time, BTC was one of the only cryptos around with MtGox was responsible for handling over 75 percent of all BTC transactions.

The MtGox Hacks

In 2011, due to deficiencies in their security system, hackers stole credentials which they could use to transfer BTC from the exchange. In multiple waves (from 2011 to 2013), a total of 850,000 BTC was stolen. In 2014, the crypto exchange announced bankruptcy.

The MtGox Trustee

After the hacks followed the lawsuits and a lot of speculations. The crypto exchange has been in court since 2014, trying to settle the owners of BTC lost during the hacks. It was announced that the 140,000 BTC were saved from the hack and would be returned to owners.

In 2016, Nobuaki Kobayashi was appointed as MtGox’s rehabilitation trustee to aid the return of BTC to their owners. People with valid claims to their BTC stored on the ill-fated exchange were asked to send in their information. People have sent in their information, however, the case has dragged on for years.

How is MtGox Affecting the Price of Bitcoin?

At this point, you’ll be tempted to ask, how does a failed cryptocurrency exchange affect the current price of Bitcoin? Well, there is a pattern that could explain the recent nosedive of Bitcoin. There has been an announcement that owners of BTC from MtGox will get their stakes back before December 15.

In August 2019, Bitcoin was trading well above $11,000. The same announcement was made in September that year, and the price of BTC took a nosedive. By December, Bitcoin was exchanging hands under $6,000.

While we could be looking at a coincidence, the same pattern of announcement and price drop can be noticed in 2018 and 2017.

Institutional Investors and the MtGox Case

There are speculations that several institutional investors are aware of the MtGox case, and are interested in buying the BTC from owners after they are returned. People have had to wait for 6 years to see their coins returned, and are more than likely to sell their stakes now that they have grown over a thousandfold.

The case of MtGox could just be another coincidence. However, it cannot be denied that throwing a total of 140,000 BTC or $2.6 billion into the market (or out) will cause upsets.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed to be financial legal or tax advice. Trading Forex, cryptocurrencies, and CFDs poses a considerable risk of loss

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