As the bankrupt crypto exchange FTX prepares to repay its creditors, analysts are predicting the fund distribution will kick start a bullish cycle in 2025.
FTX’s Chapter 11 reorganization plan will become effective on January 3, and the initial payment is expected to occur within the next 60 days. According to some analysts, the move will potentially inject around $16 billion into the market.
Can FTX Repayments Usher in a Bull Run?
With the upcoming FTX repayments in Q1, billions in fresh capital returning to traders’ hands will likely lead to a rise in investments. FTX said it aims to return 98% of the funds lost by its customers. The repayments will be made through BitGo and Kraken.
Most notably, the crypto market is currently in a neutral phase, with most tokens already seeing significant liquidations. This might provide a good entry point for new traders and investments.
“FTX begins repaying $16 BILLION to creditors on January 3, 2025. EXPECT MAJOR LIQUIDITY INJECTIONS. THIS IS SO BULLISH FOR BITCOIN!,” crypto influencer Daan de Rover wrote.
After more than two years of bankruptcy proceedings, FTX’s repayment plan received approval in October. Under the plan, those with claims under $50,000 will be prioritized in the initial wave of payouts.
The repayment process is structured to address small claims first, with larger reimbursements set for completion later in 2025.
At least 50% of the liquidity from the payments is expected to hit the market. Pseudonymous crypto analyst Ash Crypto further stated that the repayments could even spark an altcoin season.
“FTX will start paying $16 billion in claims from 3rd January 2025. Nearly $12 billion in stablecoins. This will kickstart altseason,” the analyst said.
Another crypto exec offered the same point of view on X (formerly Twitter).
“FTX begins repaying $16 BILLION to creditors on Jan 3, 2025! Payments expected within 60 days… and guess what? A big chunk of that $$$ might flow BACK INTO CRYPTO. The bull run just got its fuel. Buckle up,” the exec wrote.
However, Sunil Kavuri, an advocate for FTX creditors, rejected the reimbursement claims, asserting that no payouts would be made in January. He also emphasized that a $16 billion distribution would not happen.
According to his analysis, FTX currently has around $13 billion in cash reserves. An increase to $14 billion is expected by March.
Furthermore, additional funds from lawsuits and venture capital investments could add another $5 billion to $7 billion.
Is All Hope Lost?
Despite the confusion regarding when the funds will be transferred, the market is hoping FTX repayments could give the bulls an upper hand next year.
Historically, the cryptocurrency market has experienced substantial recoveries following major corrections or significant liquidity inflows. The current market momentum presents an ideal setting for a rally, as Bitcoin has already surged past the $100,000 mark multiple times this year.
FTX filed for bankruptcy in November 2022 following a liquidity crisis and the resignation of founder Sam Bankman-Fried. The bankruptcy case led to several indictments of FTX and Alameda Research executives.
Moreover, the repayment news comes as BeInCrypto reported last week that there are concerns about Sam Bankman-Fried getting an early release from prison through Biden’s outgoing presidential pardon.
Overall, if the $16 billion repayment plan does go ahead as announced, the crypto market will see significant fresh liquidity. In theory, this should influence a bullish cycle.
