CEO Morning Brief

FTX Creditors Emerge as Possible Fillip for Ailing Crypto Market

edgeinvest
Publish date: Thu, 10 Oct 2024, 10:00 PM
edgeinvest
0 1,071
TheEdge CEO Morning Brief

(Oct 9): Crypto exchange FTX’s creditors are set to receive more than US$12 billion (RM51.4 billion) in the coming months in a court-approved payout plan, raising the prospect that some of the cash could be plowed back into digital assets.

The bankrupt platform in June had US $12.6 billion to return to customers, a figure that may reach US$16.5 billion, after all of its assets are found and sold. Initial distributions of about US$1.1 billion are relatively small, but are set to support Bitcoin, Galaxy Digital Holdings research head Alex Thorn wrote in a note.

Crypto traders are hunting for sources of volatility to shake Bitcoin and other tokens from a prolonged period of torpor. A gauge of the top 100 coins is down 3% this month, even though October is meant to be a seasonally strong period for digital assets, raising the prospect that a year-long rally has run out of steam.

The anticipated FTX payouts are “effectively giving liquidity to known crypto traders,” said Benjamin Celermajer, co-chief investment officer at Magnet Capital. “It’s very likely that we see some of this flow back into crypto, providing a potential price catalyst to liquidity-starved markets.”

Repayments won’t occur immediately. FTX must first put together a trust, and hire a company to oversee the process of distributing the money.

Galaxy Digital said transfers to smaller creditors may start as soon as December, while larger ones will be addressed across the first half of next year. It said remaining claims may take as many as three years to resolve.

Research company K33, in a note estimated “latent demand from FTX reallocators” of US$2.4 billion, but cautioned about a “soft” potential impact on the crypto market, as repayments are due in waves over the next year.

Demand for US Bitcoin exchange-traded funds (ETFs) helped push the token to a record high of almost US$74,000 in March. The jump subsequently fizzled as inflows cooled. The largest cryptocurrency is up 43% this year, about as much as an index of the Magnificent Seven technology megacap stocks in the US.

Bitcoin was little changed at US$62,485 as of 7:22am on Wednesday in London. Most other major digital assets also posted relatively constrained moves.

Uploaded by Liza Shireen Koshy

Source: TheEdge - 10 Oct 2024

Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment