In the aftermath of FTX collapse, creditors of the defunct crypto exchange are poised to receive over $12 billion in payouts in the coming months. The payouts, expected to start in December, could potentially breathe life back into the sluggish crypto markets.
FTX, which went bankrupt last year, had $12.6 billion available for distribution in June—a number that may climb to $16.5 billion as additional assets are recovered and sold. Initially, creditors will receive about $1.1 billion. While this is just a fraction of the total owed, experts believe that even this smaller distribution could help stabilize cryptocurrencies like Bitcoin.
FTX Creditors’ Impact on Crypto
Alex Thorn, Research Head at Galaxy Digital Holdings, told Bloomberg that these early repayments could positively affect Bitcoin, especially in liquidity-starved markets.
Benjamin Celermajer, co-chief investment officer at Magnet Capital, echoed this sentiment, stating that these payouts would essentially be putting money back in the hands of seasoned crypto traders. Many expect a portion of these funds to flow directly into digital assets, providing a much-needed price catalyst in a market that has seen stagnant movement over the past month.
Although repayments won’t occur all at once, there is still considerable optimism surrounding the eventual market impact. Galaxy Digital predicts that payments to smaller FTX creditors could begin by December, with larger creditors receiving their share throughout the first half of next year.
Volatility in a Quiet Market
Crypto markets have been uncharacteristically quiet in recent weeks. Bitcoin is up 43% this year but remains far from its previous highs, currently trading above $62,400. With October historically being a strong month for crypto, many traders have been left frustrated by the lack of volatility.
Research firm K33 noted in a report that “latent demand” from FTX creditors could amount to around $2.4 billion. However, they warned that the effect on the market may be “soft,” given that repayments will be staggered across multiple months.
As FTX moves forward with the complex task of setting up a trust to manage these distributions, all eyes will be on whether this influx of liquidity can reignite the crypto market.
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