FTX repayments could bring “bullish suspense” to crypto markets

Analysts at K33 said that “not all creditor repayments are bearish,” noting that FTX’s cash payouts compare to crypto repayments from Gemini and Mt. Gox.

K33 Research analysts said the scheduled cash repayment to FTX creditors could create a wave of bullish “buying pressure” in the cryptocurrency market.

FTX will pay at least $14.5 billion in cash to users who lost funds due to the exchange’s bankruptcy. The payouts could create “bullish overhang” in the market, K33 analysts Vetle Lunde and Anders Hesleth said in a May 14 report.

“Not all creditor repayments are bearish,” the analysts said. They contrasted FTX’s expected cash repayments with planned crypto-based repayments from Mt. Gox and Gemini — which together are “currently valued at $10.6 billion.”

Lund and Hesleth conclude that buying pressure from cash recipients will offset selling pressure from physical recipients.

Analysts noted that it was “impossible” to determine in advance the net buying or selling pressure these repayments would generate, and said the timing of payments could become a key factor in predicting their impact on the market.

Related: Post-FTX, Crypto Industry Needs Education Before Regulation

Gemini’s $1.7 billion repayment is scheduled to be completed in early June, while Mt. Gox’s $8.9 billion is expected to be repaid by an October 2024 deadline.

Analysts noted that there is still some uncertainty about the scheduled repayment date as the court has not yet approved FTX's repayment proposal, but said that most FTX creditors expect repayments to be issued later this year.

“These differences in repayment timings again suggest a slow summer in the market followed by a solid end to the year.”

On May 8, FTX said it could repay creditors up to $16.3 billion, with creditors with claims of less than $50,000 eligible for up to 118% recovery — using their November 2022 cryptocurrency prices.

Some industry experts have expressed dissatisfaction with the proposal, saying not all creditors will receive repayments equivalent to current market prices.

“I understand why the bankruptcy process needs to be conducted this way, but let’s not pretend that the victims got their money back,” BitGo CEO Mike Belshe wrote in a May 8 post to X.