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Analysts question impact of $16B FTX repayments on markets

Analysts question impact of $16B FTX repayments on markets

GrafaGrafa2024/10/09 00:10
By:Mahathir Bayena

Analysts at Presto Labs are expressing scepticism about whether the $16 billion in repayments to FTX (CRYPTO:FTT) creditors will significantly boost the cryptocurrency market. 

According to Presto Labs, it is premature to assume that creditors will reinvest the funds into digital assets without further analysis of creditor behavior.

The U.S. Bankruptcy Court for the District of Delaware recently approved FTX’s reorganisation plan, allowing 98% of creditors to receive approximately 119% of their allowed claims within 60 days after the effective date. 

The total amount to be repaid is estimated between $14.7 billion and $16.5 billion, involving assets managed by the Chapter 11 debtors, U.S. authorities, and liquidators in the Bahamas.

Despite the approval of the repayment plan, Presto Labs noted that it’s unlikely the funds will immediately return to the crypto market. 

“It’s premature to assume that creditors will put that cash straight back into the market,” the analysts explained, adding that no public analysis has been made about the creditor composition.

In the wake of this development, the broader cryptocurrency market has shown slight declines, with Bitcoin (CRYPTO:BTC) dropping 1.9% to $62,300 and Ether (CRYPTO:ETH) falling 2.2% to $2,425, according to CoinGecko data.

Georgy Slavin-Rudakov, CMO of B2BINPAY, commented on Bitcoin’s price dip, stating that it’s a “healthy correction” after the recent price rally. 

Despite the uncertainty surrounding FTX’s repayments, some tokens like Solana (CRYPTO:SOL) and Tron (CRYPTO:TRX) have seen their value more than double since FTX’s collapse, though others still face challenges due to FTX’s overwhelming token holdings.

At the time of writing, the FTX Token price was $2.38.

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