According to A report by research firm K33 Research, the price of Bitcoin (BTC) may benefit from the latest developments in the FTX bankruptcy saga.
FTX creditor payouts could be bullish for Bitcoin
Analysts at K33 suggest that recent changes to FTX’s real estate creditor repayment process could lend a hand the leading digital asset maintain its bullish price momentum in the fourth quarter of 2024.
Last week escalation Geopolitical tensions in the Middle East and better-than-expected U.S. employment data led to a slight decline in Bitcoin’s value. 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 U.S. Bankruptcy Court for the District of Delaware approved highly anticipated FTX’s reorganization plan to initiate repayments to creditors nearly two years after the collapse of the Bahamas-based cryptocurrency exchange.
Notably, almost 94% of creditors were in the “dotcom customer entitlement claims” class. voted behind the reorganization plan. The only grave criticism of the plan was Sunil Kavuri – a representative of the largest group of FTX creditors.
When FTX filed for bankruptcy in November 2022, Kavuri called for the estate to pay out the digital assets in kind instead of their equivalent dollar value.
In the report, K33 analysts Vetle Lunde and David Zimmerman expect creditor payouts to begin in the second half of the fourth quarter of 2024 and continue into the early first quarter of 2025. These payouts will be made within 60 days of the court’s ruling entering into force . Although the date is unknown, it is expected to take place in mid-November. The report noted:
Debtors will have 60 days to pay off individual customer claims of less than $50,000, representing assets worth about $1.2 billion. Larger creditors (entitlement class) are expected to receive payments of $9 billion in February 2025.
Bulls monitor funds entering the cryptocurrency market
Bitcoin bulls will likely focus on the amount of cash out that could potentially re-enter the cryptocurrency market. It’s worth noting that a significant portion of digital assets have already been converted to fiat, reducing potential selling pressure from the estate plan.
Analysts assume that of the $14.4 billion to $16.3 billion in claims, about 25%, or $3.9 billion, has already been purchased by credit funds and is unlikely to hit the market again.
Additionally, 33% of the remaining claims belong to the subgroup of sanctioned countries, insiders and entities without KYC verification. It is unlikely that these assets will be taken away.
After taking these factors into account, between 20% and 40% – or about $2.4 billion – of the remaining $8 billion could return to the markets because “FTX’s trader base consisted of crypto-native, aggressive risk-takers.”
The report further emphasizes that this capital will likely enter the markets in multiple waves in 2025, having a relatively compact impact on the entire cryptocurrency market. At press time, Bitcoin was trading at $62,793, down 1.1% over the past 24 hours.
Featured image from Unsplash.com, charts from K33 and TradingView.com
