Bitcoin investors could face a fresh round of intense selling pressure as a collapsed Japanese cryptocurrency exchange is forced to payout $1bn worth of digital coins, experts have warned.

The digital currency, which has already plunged in value from $17,035 in January $6449 yesterday, is set to slide further in the coming weeks as Mt.Gox, a bankrupt Bitcoin exchange, pays out thousands of coins to creditors.

Kim Nilsson, who has led a four-year campaign to reclaim his stake in the defunct exchange, told the Sunday Telegraph the flood of payouts threatens to "completely crash the market" in Bitcoin.

The payouts to investors who lost vast sums comes after an extraordinary digital heist by Russian hackers in 2014, which triggered the exchange's collapse. Bitcoin is a digital currency that exists only online. The warning follows a dramatic plunge in cryptocurrency values. Hundreds of cryptocurrencies have seen nearly $200bn wiped off their total value this year.

Mt.Gox will distribute the 160,000 Bitcoins it holds to customers at current valuations. Investors who lost money when Mt.Gox collapsed have until 22 October to file claims.That could trigger sales of Bitcoin worth $1bn.

A lack of willing buyers could exacerbate the recent price crash, warned Mr Nilsson, a former Mt.Gox customer who spearheaded the investigation into the exchange's bankruptcy.

“If you were to ever try to convert [Mt.Gox’s holdings] into fiat currency and pay it out as yen or dollars or pounds, that would completely crash the market because it’s such a large amount,” he said.