Today marks the beginning of the long-anticipated payout process for creditors of FTX, which has been in bankruptcy proceedings for over two years. This initial wave of repayments is aimed at smaller creditors, but its impact could ripple through the cryptocurrency industry, particularly if these payouts are made in crypto assets.
A crypto analyst known as Excavo has offered insights on TradingView, discussing the potential changes in liquidity that might result from FTX’s creditor payouts and their broader impact on Bitcoin and other altcoins.
FTX has announced that it will start repayments on February 18, focusing initially on creditors in the convenience class—those with claims of $50,000 or less. These creditors will receive full repayment along with an additional 9% annual interest that has accumulated since November 2022, amounting to approximately $1.2 billion in total payouts.
For those with claims exceeding $50,000, distributions are slated to begin in the second quarter of 2025, with FTX planning to dispense $7 billion as part of a comprehensive $16 billion payout. According to Excavo, these payouts carry implications that stretch beyond individual stakeholders, as the redistribution could significantly alter liquidity patterns across the crypto market.
Should creditors receive their payouts in cryptocurrency and opt to sell, this might exert downward pressure on the market. However, since most repayments are expected to be in cash, it remains to be seen how investors will channel these funds back into the market. The initial thought is that much of this repayment pool will flow back into Bitcoin, potentially sparking a price surge.
Nevertheless, with such substantial capital set to reenter the market, there’s a strong possibility that altcoins could see a share of this inflow. This is particularly likely if Ethereum staking ETFs secure regulatory approval later in 2025. Speculation suggests this could lead to a wave of capital directed toward other altcoins such as Cardano, Dogecoin, XRP, and notably, Solana. Excavo points out that many altcoins remain undervalued due to a lack of liquidity rotation but this could change if significant portions of FTX repayments diversify beyond Bitcoin.
The overall FTX creditor payout is expected to surpass $16 billion, predominantly in cash. This injection of funds might bring new buying momentum if reinvested into the market, aligning with the optimistic expectations of bullish investors.
Within the Reddit crypto community, some have declared their intention to reinvest their FTX payouts back into the crypto sector. “It’s all getting degen’d straight back into crypto,” one Reddit user remarked.
While Bitcoin has recently attracted a major share of market inflows, the larger part of FTX’s repayments might well find their way back into Bitcoin. However, Excavo believes otherwise, predicting that much of these repayments will flow into the altcoin sphere.
At present, Bitcoin is trading at $95,300, experiencing a slight decrease of 0.75% in the past 24 hours.
Featured image sourced from Unsplash, with chart details provided by TradingView.com.
