In a recent statement, Coin Bureau CEO Nic Puckrin highlighted a potential catalyst in the cryptocurrency market that has been largely ignored. This catalyst involves cryptocurrency enthusiasts raising $14 billion in fiat money and potentially reinvesting that money into crypto.
It's been nearly two years since FTX's collapse, and the landscape has changed significantly since then. The primary development is the bankrupt company's plan to repay 118% of all creditor dollar demands, a staggering $14.5 billion. This money will go to people who have already invested in crypto, according to the analyst.
While some FTX creditors may choose to hold onto their dollars, Puckrin believes a significant number of them will want to reinvest that money back into the markets. This could be particularly useful at the moment as it could help counter payments from Mt Gox.
When combined with Gemini crypto payments, the total cryptocurrency sent to creditors reaches $10.6 billion. However, when FTX fiat payments are included, a net cash surplus of $3.9 billion will be paid out.
K33, Mt. Examined the net liquidity impact of various scenarios, including three scenarios where Gox/Gemini sells and two scenarios where FTX creditors buy. Results range from a net negative of $2.3 billion to a positive of $1.19 billion.
Puckrin suggests that these estimates may be too conservative. FTX envisions a scenario where at least 50% of the fiat stash returns to BTC. This would lead to net positive liquidity of at least $1.9 billion even if Gox/Gemini buyers divest 50% of their assets. In a best-case scenario, this could lead to net purchases of over $4 billion.
However, Puckrin also notes that timing is very important. While Gemini targets June and Mt. Gox's payment deadline is October, while FTX creditors are preparing for late Q4 payments. Therefore, it may take some time for purchases by FTX credit investors to impact net liquidity.
Despite this, Puckrin remains optimistic and says, “It's good to see that there may be some forces resisting the selling pressure.”
*This is not investment advice.