Sam Bankman-Fried’s bankrupt exchange is preparing to reimburse its aggrieved customers with a staggering $16 billion FTX payout in cash. Experts have predicted that the massive liquidity injection could re-energize the market and become a Bullish catalyst for a Bitcoin rally towards the end of the year.
Snippets from the Q4 2024 10x Research Report show that the distribution of $16 billion by FTX, which should begin in a fortnight, could have a bullish effect on the entire cryptocurrency market. The majority of the recipients of the FTX payout are crypto-savvy individuals deeply entrenched in the digital space and are likely to return a substantial amount of the funds into the crypto ecosystem. This massive injection of liquidity could create substantial buying pressure in the digital asset space and re-energize a market that has recently been shaky.
The Cash Injection Plan Has Sparked a Wave of Anticipation
The process leading to FTX’s reimbursement started when the FTX team struck a deal with U.S. government authorities and promised to return the said amount of funds to the exchange’s aggrieved customers. The calendar of events for the process mentioned August 16, 2024, as the deadline for creditors to vote, with October 7, 2024, being earmarked as the final approval date for the liquidation plan. Should everything go according to schedule, payments will begin within a fortnight.
The impending $16 billion cash injection has sparked a wave of anticipation and speculation that the influx of capital could lead to a potential Bitcoin rally. The billions of dollars are expected to re-enter the cryptocurrency and digital asset market at a time coinciding with the upcoming U.S. elections, a time when financial markets experience increased volatility. Experts believe the influx of capital from the $16 billion FTX payout could amplify price movements, especially for Bitcoin.
Reimbursement to be based on the Value of Crypto
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According to a compensation plan for reimbursing the customers, funds for the $16 billion FTX payout will be sourced from the liquidation of different assets that crypto exchange FTX acquired by embezzling customer funds. Among the most prominent assets are real estate, venture funds, technology companies, and cryptocurrency investments. Particularly, the receivers garnered over $500 million by selling FTX’s shares in AI startup Anthropic, leading to a cash reserve of over $6.4 billion in February 2024.
There’s every chance that the FTX estate could actually compensate its creditors, considering that the balance of the money is reportedly under the control of liquidators and debtors. The greatest beneficiaries from the $16 billion payout will be retail crypto investors who had accounts at the exchange. Apparently, the aggrieved customers are set to receive reimbursement based on the value of their crypto when it filed for bankruptcy in November 2022, with some added interest to account for the time their money has been held.
The Outcome Will Differ
The impending $16 Billion cash injection to the distressed crypto traders is a significant moment for the FTX bankruptcy case. The impact that could be caused by the possibility of the funds re-entering the market in the coming days cannot be underestimated, as it could be transformative to the entire cryptocurrency landscape. Investors and stakeholders within the crypto space are anticipating a Bitcoin rally as the process of restitution unfolds, signaling the start of a new chapter in the FTX saga.
As the date for the $16 billion payout draws closer, market participants can’t wait to see the true implication of the event in the crypto sphere. Experts believe the compensation by FTX will differ from the Mt. Gox BTC distribution that negatively impacted the price of Bitcoin. While Mt. Gox creditors were repaid in Bitcoin, FTX customers will a cash injection, which could potentially create buying pressure in the market. The only factors that could short-circuit the anticipated positive impact of the reimbursement could be any court delays or dissatisfied customers asking for a revision of the settlement plan before its finalization.
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