In a major development for the cryptocurrency industry, FTX is the exchange that collapsed in November 2022, led by convicted Sam Bankman-Fried, is preparing to distribute as much as $16 billion in cash to its customers, which could lead to significant gains for the prices of Bitcoin (BTC) and Solana (SOL) .
Crypto researcher Xremlin has predicted that a significant portion of this money will flow back into the crypto market, serving as a catalyst for growth by the end of the year.
FTX $16 billion cash injection
In a recent post on social mediaXremlin highlighted the importance of the distribution and emphasized that it involves returning $16 billion in cash to individuals already involved in the crypto space.
Xremlin believes that a significant portion of this money will be reinvested into the market, particularly in the purchase of various tokens including Bitcoin and Solana, creating significant buying pressure and price growth for both cryptocurrencies.
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The source of this huge cash injection can be traced back to that of FTX agreement with US government agencies, where assets acquired with embezzled client money were sold. These assets include investments in cryptocurrencies, technology companies, venture capital funds and real estate.
After selling shares in AI startup Anthropic, where FTX had previously invested $500 million, the ailing exchange found $6.4 billion in cash. It is important to note that the amount also includes the assets controlled by debtors and liquidators.
However, the distribution has faced dissatisfaction among some customers due to the settlement of customer claims based on lower cryptocurrency prices as of November 2022, when FTX filed for bankruptcy.
For example, customers who have 10 Ethereum’s native token ETH in their account will receive approximately $12,000 in cash, significantly lower than the asset’s current value of approximately $29,000, as ETH trades for $2,900.
Despite objections, the court approved creditors’ voting liquidation planand if passed with the necessary number of votes, the plan will be implemented upon final approval by the court.
Buy Frenzy for Bitcoin, Ethereum and Solana?
Key dates to keep an eye on for further developments include August 16, 2024, the deadline for FTX customers to vote on the bankruptcy phase-out payments, and October 7, 2024, when Judge John Dorsey will consider approving the FTX’s bankruptcy plan.
If the current plan is approved, customers can expect payouts to begin by the end of the third quarter, potentially providing much-needed liquidity for token purchases. This timing coincides with the US elections, which could contribute to increased market volatility.
Consequently, FTX payouts could serve as an additional factor fueling a bullish trend in the crypto market as it is in significant price declines.
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Bitcoin has fallen more than 21% at one end of the market over the past month, from a high of $71,000 to a current trading price of $56,400. In the meantime, Solana surpassing BTC’s losses with a 22% decline in the same time frame and currently trading at $134.
Furthermore, it is expected that the continued selling pressure from the US and German governments, which we witnessed last month, could continue for the rest of the year. cash injection from FTX to crypto investors could help ease expected selling pressure.
The researcher points out that since most of the affected FTX customers are retail crypto investors, a significant portion of the money is expected to flow back into cryptocurrencies. Bitcoin, Ethereum and Solana are likely to receive the most liquidity.
Featured image of DALL-E, chart from TradingView.com
