$2.4 billion could re-enter crypto markets following FTX refund, analysts suggest

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K33 analysts estimate that approximately $2.4 billion can be reinvested in crypto markets following the implementation of FTX’s reorganization plan. The move, along with a recent price recovery, supports a bullish outlook for Bitcoin in Q4.

On Monday, U.S. District Judge John Dorsey confirmed that FTX’s ownership could move forward with its reorganization plan. The plan will allow the entity to distribute up to $16 billion in recovered assets to FTX creditors.

Under the plan, those with approved claims under $50,000 will receive their refunds within 60 days of the effective date. K33 analysts Vetle Lunde and David Zimmerman predict that creditor payments will begin at the end of the fourth quarter of 2024. Full resolution of larger claims could take until mid-2025.

Analysts estimate that $3.9 billion of the total claims were purchased by credit funds, which they believe are unlikely to re-enter the crypto market.

As for the remaining 33% of claims that were held by sanctioned countries, insiders or people without KYC verification, they suggest that these groups likely cannot claim the funds.

Based on assumptions, analysts narrow the potential amount of funds that could re-enter the crypto markets to around $2.4 billion, and the injection could be made by FTX’s risk-tolerant crypto-native trader base. However, they note that the impact may be gradual and extended over the next year, limiting its overall effect on the market.

“This will likely unfold in several waves over the coming year, meaning its overall impact on the crypto market may be weak,” the analysts wrote.

Crypto analyst Marty Party also suggested that many of the lenders who receive the money will likely reinvest it in crypto assets, which could boost the overall market.

remember, #FTX will redistribute $16,000,000,000 to their creditors in Q4 2024. That’s in 2 weeks.

Most of the liquidity will go back into crypto. pic.twitter.com/GQi7RhcaH6

— MartyParty (@martypartymusic) September 19, 2024

Repayments will start soon according to the FTX repayment plan. Although the exact date has not yet been set, the timing is likely to coincide with the US presidential election. This period has historically been associated with an increase in financial market volatility.

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