As the bankrupt cryptocurrency exchange FTX prepares to repay creditors, analysts predict that a bull cycle will begin in 2025.
FTX's Chapter 11 reorganization plan will take effect on January 3, and initial payments are expected to be made within the next 60 days. According to some analysts, this action could inject around $16 billion into the market.
FTX Repayment, Start of a Bull Market?
The upcoming FTX repayment in the first quarter will return billions of dollars to traders. FTX has stated that it plans to return 98% of the funds lost by customers. The repayment will be facilitated through BitGo and Kraken.
The Bit cryptocurrency market is currently in a neutral state, and most tokens have already experienced significant liquidation. This can provide a good entry point for new traders and investors.
"FTX will start repaying $16 billion to creditors on January 3, 2025. Expect a major liquidity injection. This is very bullish for Bit!" wrote Bit influencer Daan de Rover.
After over 2 years of bankruptcy proceedings, FTX's repayment plan was approved in October. Under this plan, those with claims under $5,000 will be prioritized for the initial payments.
The repayment process is structured to first address smaller claims, with larger payouts expected to be completed in the latter half of 2025.
At least 50% of the payout amounts are expected to flow back into the market. Pseudonymous Bit analyst Ash Crypto also mentioned that the repayment could trigger an Altcoin season.
"FTX will start repaying $16 billion in claims starting January 3, 2025. Almost $12 billion of that is in stablecoins. This will kick off an Altcoin season," the analyst said.
Another Bit executive also expressed a similar view on X (formerly Twitter).
"FTX will start repaying $16 billion to creditors on January 3, 2025! Payments are expected within 60 days... and a good chunk of that money could flow back into Bit. The bull market has been refueled. Get ready," the executive wrote.
However, Sunil Kavuri, an advocate for FTX creditors, has rejected the repayment claims, arguing that payments will not be made in January and that the $16 billion distribution will not materialize.
According to his analysis, FTX currently holds around $13 billion in cash, which is expected to increase to $14 billion by March.
Additionally, another $5 billion to $7 billion could be added from litigation and venture capital investments.
When Will the Actual Funds Be Deployed?
Despite the confusion over when the funds will be transferred, the market is hopeful that the FTX repayment can drive a bull market next year.
Historically, the Bit market has experienced significant recovery after major corrections or substantial liquidity inflows. The current market momentum provides an ideal rally environment, with Bit breaking $100,000 several times this year.
FTX filed for bankruptcy in November 2022 after a liquidity crisis and the resignation of founder Sam Bankman-Fried. The bankruptcy event has led to multiple indictments of FTX and Alameda Research executives.
Moreover, the repayment news came at a time when BeInCrypto reported concerns that Sam Bankman-Fried could be released early through a presidential pardon by Biden.
Overall, if the $16 billion repayment plan is executed as announced, the Bit market can expect to see a significant influx of new liquidity. Theoretically, this could impact the start of a bull cycle.
