Bitrabo Editorial
A new report from K33 Research, a cryptocurrency analysis firm, indicates that Bitcoin (BTC) may experience a positive impact due to recent events in the FTX bankruptcy case.
Positive Outlook for Bitcoin from FTX Developments
Experts at K33 believe that the latest updates in the process of repaying FTX creditors could bolster Bitcoin’s price trajectory as we approach the fourth quarter of 2024.
Recently, heightened geopolitical tensions and unexpectedly strong employment statistics in the US led to a minor dip in Bitcoin’s value, dropping from $65,920 on September 28 to $60,200 by October 3, before partially recovering over the following weekend.
On October 7, Judge John Dorsey sanctioned the long-awaited FTX reorganization plan in the US Bankruptcy Court for Delaware, aiming to kick-start repayments to creditors almost two years after the collapse of the Bahamas-based exchange.
Noteworthy is the fact that about 94% of creditors in the “dotcom customer entitlement claims” category supported the reorganization plan. However, the plan faced criticism primarily from Sunil Kavuri, representing a significant creditor group, who argued for paying out digital assets directly rather than their dollar equivalents at the time of bankruptcy in November 2022.
K33 analysts, Vetle Lunde and David Zimmerman, predict that creditor payouts will commence in the latter part of Q4 2024 and carry into early Q1 2025, occurring within 60 days of the court’s effective execution date, which is anticipated to be around mid-November. The report states:
“Debtors will have 60 days to reimburse customers with claims under $50,000, totaling about $1.2 billion. Larger creditors are projected to receive their $9 billion in February 2025.”
Investors Keeping an Eye on Crypto Cashflow
Investors bullish on Bitcoin will likely concentrate on how many of the payout funds might be reinvested into the cryptocurrency market. A significant portion of the digital assets has already been converted into fiat, lessening the potential for sell-side pressure from the reorganization payouts.
The analysis indicates that out of the claims amounting to $14.4 billion to $16.3 billion, roughly 25% or $3.9 billion has already been acquired by credit funds and is not expected to return to the market. Furthermore, 33% of the outstanding claims belong to sanctioned nations, insiders, and entities lacking proper KYC verification, meaning these assets are improbable to be claimed.
Considering these elements, it is estimated that between 20% to 40%—about $2.4 billion—of the leftover $8 billion may re-enter the market since “FTX’s trader base largely consisted of aggressive crypto risk-takers.”
The report highlights that this influx of capital is likely to flow into the market in several phases throughout 2025, impacting the overall cryptocurrency market relatively little. At present, Bitcoin is trading at $62,793, reflecting a decrease of 1.1% over the last 24 hours.
