FTX Asset Repayment Plan Could Spark Q4 Bullish Wave

According to analysts at K33 Research, FTX’s restructuring plan will see around $2.4 billion in creditor repayments return to the crypto market.

Although financial and crypto markets saw a decline last week due to escalating tensions in the Middle East, Bitcoin’s rebound to $64,000 and positive progress on FTX’s creditor repayments keep the “bullish” outlook for Bitcoin and the broader crypto market intact in Q4, say researchers at crypto market analysis firm K33 Research.

Specifically, K33 analysts Vetle Lunde and David Zimmerman estimate that FTX's creditor repayments will begin in late Q4 and last until early Q1 2025, within 60 days of the court's effective date, which is expected to fall in mid-November.

Since the amount of the recovery exceeds FTX's deficit at the time of the platform's collapse, which was around $8-10 billion, the FTX receiver claims to be able to compensate 98% of all FTX users with up to 118% of the value of the assets being requested to be repaid.

"Debtors will have 60 days to repay each customer with a claim value under $50,000, representing approximately $1.2 billion in assets. Larger creditors (interest groups) are expected to receive their $9 billion payment in February 2025."

So the question here is, "how much of this total refund will be 'reinvested' back into the crypto market?", since the value of crypto assets has been converted to fiat by FTX, meaning that the selling pressure from the exchange is no longer there.

Of the total claim of $14.5 - $16.3 billion in assets available to be returned to creditors and affected users, analysts estimate:

$3.9 billion has been bought back by credit funds: It is highly unlikely that this will be used to reinvest back into the market.

About 33% (equivalent to more than 4 billion USD) is owned by groups of sanctioned countries, insiders, and those without KYC verification: No compensation can be claimed.

Of the remaining 8 billion USD, it is estimated that about 20 - 40% (equivalent to 2.4 billion USD) will be reinvested back into the crypto market: Because the majority of FTX's customer data is mainly veteran crypto investors. However, analysts believe that the amount of money deposited into crypto will not happen all at once, but will be distributed in many times until the end of 2025, which means creating healthy growth momentum for the entire market.

However, experts from K33 Research found that investors are still "cautious" about the current crypto market situation, mostly due to concerns about the price increase of altcoins that will be difficult to keep up with the growth rate of Bitcoin (BTC) and Ethereum (ETH).

Although Bitcoin has corrected 15% since its all-time high of $74,000 in March, the largest cryptocurrency by market cap has still posted a 40% gain year-to-date, with its crypto market dominance rising from 52.5% to 58% this year. Meanwhile, ETH’s dominance has dropped from 16.7% to 13.8%, with the ETH/BTC ratio at a multi-year low of below 0.039 — suggesting traders remain cautious about the market sentiment.

K33 Research experts explain that investors' caution is understandable, for the following two reasons:

Only 21 of the top 100 cryptocurrencies by market capitalization showed outstanding growth compared to Bitcoin in 2024, but most of them are memecoins, illiquid coins, or new Layer-1 projects such as Aptos, Sui, Saga...

Only about 25 coins had positive returns, but growth was poor compared to BTC, such as ETH, SOL, AAVE, DOGE and TRX.

"These statistics show that the growth during the first 9 months of 2024 was mainly focused on Bitcoin, while most altcoins did not participate in the bull market," the analysts said.

Sharing the same view with K33 Research, QCP Capital analysts also commented that recent economic stimulus policies from China could boost the growth of risky assets, including crypto, in the coming time.

"Although the Chinese stock market fell sharply last week after the government's press conference did not introduce new economic stimulus measures, in the medium term, information about the US presidential election will continue to boost the crypto market," QCP Capital analysts said in their latest weekly report.