K33 Research analysts say the scheduled cash repayment to FTX’s creditors could create a wave of…
K33 Research analysts say the scheduled cash repayment to FTX creditors could create a wave of bullish “buying pressure” in the cryptocurrency market.
FTX is set to pay out at least $14.5 billion in cash to users who lost money in the exchange’s bankruptcy. These payments are likely to create an “upside burden” for the market, K33 analysts Vitel Lund and Anders Heisleth said in a May 14 report.
“Not all creditor payments are bearish,” analysts said, comparing FTX’s expected cash repayment with planned cryptocurrency-based repayments from Mt. Gox and Gemini – the latter two combined are “currently worth $10.6 billion”.
Lund and Heasleth concluded that buying pressure from cash recipients would neutralize selling pressure from in-kind recipients.
Noting that it would be “impossible” to determine net buying or selling pressure from these payments ahead of time, analysts said the timing of the payments could constitute a key element in predicting their impact on the market.
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The $1.7 billion payment to Gemini is scheduled for early June, while the $8.9 billion payment to Mt.Gox is expected by the October 2024 deadline.
Analysts noted that there was still some uncertainty about the scheduled repayment date due to the court not yet approving FTX’s repayment proposal, but said that most of FTX’s creditors were expecting repayment installments to be issued later this year.
“The different timing of these premiums is another indicator of a summer slowdown in the market and a strong end to the year.”
On May 8, FTX said it could repay creditors up to $16.3 billion, with those with claim amounts under $50,000 eligible for up to 118% recovery – using the price of their cryptocurrencies in November 2022.
Some industry experts expressed dissatisfaction with the proposal, saying that not all creditors would receive premiums equivalent to current market rates.
“I understand why the bankruptcy process had to go this way, but let’s not pretend that victims are getting their money back,” BitGo CEO Mike Belshy wrote in a May 8 post to X.
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