The trustees of the defunct crypto exchange Mt. Gox announced on Monday that they are preparing to start distributing bitcoin (BTC) to clients affected by the 2014 hack, beginning in the first week of July. Despite initial concerns, traders believe the selling pressure from these repayments might be less severe than anticipated.

According to Galaxy Research, a significant portion of the distributed Bitcoin may not be immediately sold. Most creditors are expected to hold onto their BTC due to their low-cost basis, which would help ease concerns about an immediate market selloff.

Sam Callahan, senior analyst at Swan Bitcoin, expressed confidence that the impact on Bitcoin’s price would be minimal. “The impact on Bitcoin’s price from Mt. Gox distributing Bitcoin is likely overblown,” Callahan said in an email to CoinDesk. “Creditors who wanted to sell their bitcoin have had more than 10 years to do so by selling their bankruptcy claims to more convicted, long-term investors.”

Callahan further noted that most creditors are likely to retain their bitcoin because their cost basis is less than $700 per BTC, making it more profitable to hold than to sell.

In a Monday note, Galaxy Research detailed that out of the total 141,000 BTC earmarked for distribution, 65,000 BTC will be delivered to individual creditors, and another 30,000 BTC will go to claims funds and separate bankruptcy entities. The firm suggested that funds which acquired claims from creditors are likely to distribute the BTC to their limited partners (LPs) in kind rather than selling it off, which would help alleviate market concerns.

Earlier in May, Mt. Gox trustees consolidated 140,000 BTC, worth approximately $9 billion, from multiple cold wallets to a single address. Although the exact amount to be distributed remains unknown, this consolidation has sparked discussions about potential market impacts.

Expectations of upcoming selling pressure caused Bitcoin to drop more than 4% on Monday, briefly falling below $60,000 for the first time since early May. However, the insights from Galaxy Research and analysts like Callahan suggest that fears of a massive selloff may be overblown.

Source: Coindesk