Analysts suggest that $2.4 billion could be re-entered into the crypto markets following the FTX payout
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An estimated $2.4 billion from FTX fees could be pumped back into the crypto market. The plan may provide a positive boost to the crypto market, but its impact may be limited and gradual.
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K33 analysts estimate that around $2.4 billion could be reinvested in crypto markets following the implementation of FTX's reorganization plan. The move, coupled with the recent price recovery, supports optimism for Bitcoin in Q4.
On Monday, U.S. District Judge John Dorsey confirmed that the FTX estate can proceed with its reorganization plan. The plan allows the firm to distribute up to $16 billion in recovered assets to FTX's creditors.
Under the plan, those approved for less than $50,000 will receive their payment within 60 days from the date their claim is approved. K33 analysts Vetle Lunde and David Zimmerman predict that creditor payments will begin at the end of Q4 2024. Larger claims may take up to mid-2025 for full settlement.
The analysts estimate that $3.9 billion of the total claims were bought by credit funds.
33% of the remaining claims are owned without KYC verification and these groups are unable to claim the funds.
Based on the estimates, the analysts can narrow down the amount of money that can be injected into the crypto markets to around $2.4 billion and the injection can be done according to FTX's native, risk-tolerant trader. However, they note that the impact may be gradual and spread over the next year and limit the overall impact on the market.
“This will manifest itself in several waves in the next year, which means that the overall impact on the crypto market may be soft,” the analysts wrote.
Crypto analyst Marty Party also suggested that many lenders who receive the money will reinvest in crypto assets, which could boost the overall market.
Remember, #FTX will distribute $16,000,000,000 to creditors in Q4 2024. This is in 2 weeks time.
Most of that liquidity will come back into crypto. pic.twitter.com/GQi7RhcaH6
— Martyparty (@martypartymusic) September 19, 2024
Payments under the FTX payment plan will begin soon. While the exact date is not yet known, the timeline is likely to coincide with the US presidential election. This period is historically associated with increased financial market volatility.
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