Alex Thorn, head of research at Galaxy, believes the upcoming distribution of over 140,000 Bitcoin (BTC) from the defunct Mt. Gox exchange will have a milder market impact than expected.

Thorn’s research indicates that the majority of the selling will come from individual creditors, who will receive less than half of the total 140,000 BTC. He argues that most of these creditors have been involved with Bitcoin since its early days and are unlikely to sell.

According to Thorn:

“Creditors are largely long-term Bitcoiners. They are tech-savvy early adopters who have resisted years of compelling and aggressive offers from claims funds, indicating they prefer their coins over a USD payout.”

Bitcoin saw a broad price decline on Monday after the Mt. Gox trustee announced plans to start returning the BTC to clients in July. The assets were originally stolen in a high-profile hack in 2014. As of now, Bitcoin is trading just above $59,000, down over 7.5% in the last 24 hours, its lowest level since early May. Ethereum (ETH) and the broader altcoin market also experienced declines.

Mt. Gox Concerns

Market worries about the impact of a large influx of Bitcoin in less than a month caused the slide. The anticipated 140,000 BTC distribution is slightly less than Fidelity’s spot Bitcoin ETF holdings, which recently held 167,375 BTC.

However, Thorn believes these fears are overblown, noting that individual creditors expected to sell will receive only 65,000 BTC, not the full 140,000.

“We think fewer coins will be distributed than people expect, causing less sell pressure than anticipated,” Thorn wrote.

Thorn’s research suggests about 75% of creditors will opt for an early payout in July, leading to a distribution of around 95,000 BTC. Of these, he estimates that 65,000 BTC will go to individual creditors who are likely to hold onto their BTC rather than sell immediately.

He pointed out that these creditors have a history of resisting aggressive offers from claims funds and would face significant capital gains taxes given Bitcoin’s 140x increase since the 2014 bankruptcy.

Discussions with claims funds indicate that most partners are high-net-worth individuals viewing this as an opportunity to acquire Bitcoin at a discount, rather than arbitrageurs seeking quick profits.

Despite these mitigating factors, Thorn acknowledged that if even 10% of the 65,000 BTC allocated to individual creditors are sold, it would still result in 6,500 BTC entering the market, potentially impacting prices in the short term.

Bitcoin Cash (BCH) Will Be Hit Harder

Thorn added that Bitcoin Cash (BCH) is likely to fare worse than Bitcoin. The recovered BCH originates from Mt. Gox using its BTC keys to claim the fork, which happened years after the bankruptcy.

Given BCH’s low liquidity and the fact that no creditor originally purchased it, creditors are expected to sell a significant portion of it.

Thorn believes the BCH distribution could have a more pronounced impact on its price due to these factors. With fewer buyers and a higher likelihood of sales, BCH may face significant downward pressure.