FTX payments could create ‘bullish overshoot’ for crypto markets – K33 Research
K33 research analysts say that the amount of money paid to FTX lenders could create a wave of “buying pressure” in the crypto market.
FTX is set to pay out at least $14.5 billion in cash to users who lost money on the cash exchange. These charges could create “bullish congestion” for the market, K33 analysts Vettel Lunde and Anders Heslet said in a May 14 report.
“Not all creditor payments are boring,” the analysts said. Gox and Gemini with crypto-based payments – the latter two together are “currently worth $10.6 billion.”
Lunde and Heslett conclude that the buying pressure exerted by cash receivers offsets the selling pressure exerted by cash receivers.
Noting that it is “impossible” to determine the net buying or selling pressure before this payment, the analysts may be a key element in predicting the impact of the payment on the market.
Related: Post-FTX crypto industry needs education before regulation
Gemini's $1.7 billion payout is scheduled for early June, the Mt. Gox is expected to pay $8.9 billion by the October 2024 deadline.
Analysts pointed out that there is still some uncertainty about the payment date, which has yet to be approved by the court, but most of FTX's creditors are expecting payments by the end of this year.
“The different timing of these payments represents another indication of a slow summer in the market and a strong end to the year.”
On May 8, FTX said it could pay up to $16.3 billion to creditors with claims of less than $50,000 eligible for up to 118% recovery — using their crypto value in November 2022.
Some industry experts are unhappy with the proposal, noting that not all lenders will accept payments that match the current market value.
“I understand why the bankruptcy process has to work this way, but let's not pretend that victims are going to get their money back,” BitGo CEO Mike Belshe said in a May 8 post for X.
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