UBS (NYSE: UBS) has issued a report outlining concerns about the release of large amounts of Bitcoin (CRYPTO: BTC) to the market due to the bankruptcy settlements of Mt. Gox too much.
Although creditors of Mt. Gox are set to recoup some of their money after a decade-long liquidation process, the recovery plan gives them several options on what will be repaid and when.
According to the UBS report, the most important options for creditors include receiving a sum of money early, or waiting for further proceedings and asset recovery, as well as receiving payment in fiat or cryptocurrency , Coindesk reported.
However, the strategists also noted “the early lump sum option with fiat redemption suggests that the exchange would have to sell Bitcoin to get the necessary cash,” which previously has raised concerns about a potential negative impact on Bitcoin prices.
Although 850,000 Bitcoins were lost from exchanges in 2014, only a fraction of them are likely to have been accounted for, as the exchange only recovered 142,000 Bitcoins, 143,000 Bitcoin Cash (CRYPTO:BCH), and 69 billion Japanese Yen (510 million USD), equivalent to about 20% of the value of the attack.
However, UBS admitted that it is likely that the refunds will impact Bitcoin prices, as Bitcoin amounts to about 90% of the average active supply over the past day and 28% over the past week.
The bank also noted that an increase in supply often comes with a potential decrease in Bitcoin price.
However, UBS emphasized that the reality is likely to be less dramatic, as many of Bitcoin's early adopters are still believers in the cryptocurrency.
The bank cited recent reports implying that two of the largest creditors, with a claim share of 20%, have chosen to pay in cryptocurrency, suggesting a new supply to the market has You will be less able to concentrate.
The report further states: “Such news could be an additional factor in BTC's recent surprising resilience.”
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