There was a new development in the FTX incident, which dragged the Bitcoin (BTC) and cryptocurrency markets into a collapse in 2022, and Delaware District Bankruptcy Court Judge John Dorsey approved the restructuring plan at the hearing.
While this approval paves the way for refunds to be made to FTX creditors, analysts argued that these refunds could be positive for Bitcoin and the crypto market.
According to The Block, analysts at K33 Research said that approximately $2.4 billion in repayments to creditors could return to the crypto market after a U.S. bankruptcy judge approved FTX’s restructuring plan.
K33 analysts Vetle Lunde and David Zimmerman have predicted that payments will begin by the end of this quarter and the beginning of the first quarter of 2025. That date remains unclear, but analysts said they expect them to begin in mid-November.
“Despite last week's decline due to rising tensions in the Middle East, better-than-expected US employment data, a recovery over the weekend, and positive developments in the repayment process of FTX creditors support Bitcoin's rally in the fourth quarter.
At that point, FTX will have 60 days to refund individual customers with claims under $50,000 out of an estimated $1.2 billion in total assets.
Larger creditors are expected to receive their $9 billion payments in February 2025.”
The big question for FTX payout bulls is how many of the refunds are likely to re-enter the market.
Analysts have made a gradual distinction on this issue. At this point, analysts have noted that out of the total claims of $14.4 billion to $16.3 billion, $3.9 billion consists of loan funds, and they say that this $3.9 billion is unlikely to return to the market.
Analysts said they found a total of $8 billion after subtracting other items, and they expect 20% to 40% of this to be invested back into the crypto market.
“Because FTX’s investor base was comprised of aggressive risk takers, we expect these creditors to reinvest their money back into the market. However, this will likely happen in multiple waves over the next year, meaning the overall impact on the crypto market could be soft,” analysts said.
*This is not investment advice.