According to a report According to cryptocurrency research firm K33 Research, the price of bitcoin (btc) could benefit from the latest developments in the FTX bankruptcy saga.
FTX Creditor Payments Could Be Bullish for bitcoin
K33 analysts suggest that recent developments in the repayment process of FTX's equity creditors could help the leading digital asset maintain its bullish price momentum in the fourth quarter of 2024.
Last week, scaling Geopolitical tensions in the Middle East and better-than-expected US employment data caused a slight pullback in bitcoin. The flagship cryptocurrency fell from $65,920 on September 28 to $60,200 on October 3, before recovering some losses over the weekend.
On October 7, Judge John Dorsey of the United States Bankruptcy Court for the District of Delaware approved the long awaited FTX reorganization plan, which seeks to begin payments to creditors almost two years after the collapse of the Bahamas-based crypto exchange.
In particular, almost 94% of creditors in the “dotcom customer rights claims” class voted in favor of the reorganization plan. The only major critic of the plan was Sunil Kavuri, a representative of FTX's largest group of creditors.
Kavuri asked the estate to pay for digital assets in kind, rather than their corresponding dollar value, when FTX filed for bankruptcy in November 2022.
In the report, K33 analysts Vetle Lunde and David Zimmerman expect payments to creditors to begin rolling out in the second half of Q4 2024 and continue through early Q1 2025. These payments will occur within a period of 60 days from the court's effective date. Although the date is unknown, it is expected to be mid-November. The report states:
Debtors will have 60 days to pay individual customers with claims less than $50,000, representing approximately $1.2 billion in assets. The largest creditors (claims class) are expected to receive their payments of $9 billion in February 2025.
Bulls Monitor Funds Entering crypto Market
bitcoin bulls will likely focus on the amount of payment funds that can potentially re-enter the cryptocurrency market. Notably, a considerable portion of digital assets have already been converted to fiat money, reducing potential estate plan selling pressure.
Analysts say that of the $14.4 billion to $16.3 billion in claims, approximately 25% – or $3.9 billion – have already been acquired by credit funds and are unlikely to re-enter the market.
Additionally, 33% of the remaining claims belong to a subset of sanctioned nations, insiders, and entities without KYC verification. These assets are unlikely to be reclaimed.
After taking these factors into account, between 20% and 40% (or approximately $2.4 billion) of the remaining $8 billion could return to the markets, as “FTX's trader base was made up of takers.” of aggressive crypto-native risks”.
The report further emphasizes that this capital will likely enter the markets in multiple waves throughout 2025, which will have a relatively modest impact on the broader crypto market. bitcoin is trading at $62,793 at press time, down 1.1% in the last 24 hours.
Featured image from Unsplash.com, charts from K33 and TradingView.com
