FTX Repayment Catalyst: $14.5 Billion Payout Could Ignite Crypto Market Surge, Research Suggests

• K33 Research has disclosed that the upcoming repayments by FTX to creditors could increase buying pressure and cause a strong market performance later in the year. 

• However, a section of the crypto communities raises concerns about the overall repayment plans expected to be based on November 2022 prices. 

The crypto market has in the early hours of trading shown a little sign of resurgence, evident in the 3.96% surge in the total market cap. Fortunately, renowned analysts anticipate continuous growth to mark the beginning of the post-halving rally. However, the inconsistencies of the drivers of these potential market explosions seem to force investors to react conservatively.

At press time, Bitcoin (BTC) was up by 6% in the last 24 hours, Solana was up by 12% within the same time frame, and Shiba Inu was up by 9%.  

Analyzing the general dynamics and future behavior of the broad market is K33 Research. According to its report, the market could certainly react positively to the upcoming repayment from bankrupt crypto exchange FTX to customers. In the report, K33 analysts Vetle Lunde and Anders Hesleth pointed out that FTX is prepared to distribute a minimum of $14.5 billion in cash to its creditors.

It is important to note that this amount includes assets under the control of the Chapter 11 debtors and those under the control of the “Joint Official Liquidators of FTX Digital Markets, Ltd. (Bahamas), the Securities Commission of The Bahamas, the Joint Official Liquidators of FTX Australia, the United States Department of Justice, etc.”

Interestingly, this money could be channeled back into the crypto market, exerting buying pressure on the various assets and offsetting any negative impact from other repayment schemes involving crypto.

FTX, Gemini, and Mt. Gox Repayment to Trigger Bull Run

The K33 report reviewed by CNF also indicates a close comparison between the FTX’s cash repayments and the in-kind crypto repayments expected to be done by other entities including Mt. Gox and Gemini. 

As found in research, these creditors are due a combined amount of $10.6 billion in cryptos from the last two entities. Gemini, for instance, is scheduled to commence repayments of $1.7 billion in early June while Mt. Gox is expected to start its $8.9 billion by October 2024.

For FTX, the repayment schedule is still uncertain as it awaits court approval, however, creditors are expecting to receive their funds by the end of 2024. Based on the scheduled time for these repayments, the analysts expect a slow summer in the market, followed by a massive price surge getting to the end of the year. 

Analysts Expect Buying Pressure Rather Than Selling Pressure

In addressing the scenario of selling pressure that usually comes with crypto-based repayments triggered by liquidations by these recipients, the analysts explained that the cash repayment by FTX could have the opposite effect. This could possibly drive up demand and stabilize prices. 

Regardless of the position of the K33 analysts, some market insiders have expressed concerns over the FTX’s repayment proposal as recently reported by Crypto News Flash. It can be recalled that the exchange announced on May 8 that it could make repayments of up to $16.3 billion. However, only smaller claimants are eligible for recovery of more than 100% of their losses based on the prices in November 2022.

According to BitGo CEO Mike Belshe, this falls short of adequate compensation. 

0% of FTX creditors agree that receiving $16800 for your Bitcoin is fully compensated. I understand why the bankruptcy process needs to work this way but let’s not pretend victims are getting their money back or that FTX wasn’t as awful as it was.