Bankrupt crypto exchange FTX is preparing to return more than $12 billion to its creditors. This payout plan raises hopes of a possible shakeup in the crypto market. FTX owes approximately $11.2 billion to its creditors. However, this amount will increase because the stock exchange must also yield interest investments. Crypto enthusiasts are eagerly awaiting to see if some of this money will flow back into digital assets.
Will FTX’s Cash Injection Revive Crypto?
The initial refund of $1.1 billion may be small, but it could still have an impact on Bitcoin. According to Alex Thorn of Galaxy Digital, this injection could give Bitcoin a much-needed boost. Traders have been waiting for something to stir the market. Recently, the top 100 coins fell 3%, despite October being typically a strong month for crypto. Could this mean the rally is running out of steam? Some experts seem to think so.
Benjamin Celermajer, co-chief investment officer of Magnet Capital, believes this liquidity could cause some market movement. He pointed out that the payouts will transfer liquidity to traders who are well known in the space. This could act as a much-needed price catalyst.
What’s next for FTX refunds?
These refunds will not occur immediately. FTX still needs to set up a trust and hire a company to manage the process. Smaller creditors could receive money in December, but larger payouts could take until next year. In fact, some claims could take up to three years to resolve, according to Galaxy Digital estimates.
K33 Research estimates that $2.4 billion of these funds could find their way back into the crypto market. However, the impact may be slow as repayments will occur over the course of a year.
What to expect from the market
Bitcoin remains steady at a support around $62,000. While the market hasn’t seen any major moves lately, traders are hoping these payouts can provide a boost. Earlier this year, demand for Bitcoin exchange-traded funds pushed the coin to $74,000. If some of FTX’s funds return to the market, it could generate new interest and drive up prices.
Stay tuned to see how these refunds will impact the market in the coming months. Will FTX’s payouts help revive a stagnant market? Only time will tell.
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Credit : coinpedia.org
