In a significant development for the cryptocurrency industry, FTX, the exchange that collapsed in November 2022 under the leadership of convicted Sam Bankman-Fried, is preparing to distribute a staggering $16 billion in cash to its customers, which could lead to significant gains for Bitcoin (BTC) and Solana (SOL) prices.
Crypto researcher Xremlin has predicted that a considerable portion of this cash will flow back into the crypto market, serving as a catalyst for growth towards the end of the year.
FTX $16 Billion Cash Injection
In a recent social media post, Xremlin highlighted the significance of the distribution, emphasizing 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 in the market, specifically in purchasing various tokens, including Bitcoin and Solana, creating significant buying pressure and price growth for both cryptocurrencies.
Related Reading
The source of this massive cash injection can be traced back to FTX’s agreement with US government agencies, where assets acquired with misappropriated customer funds were sold. These assets encompassed investments in cryptocurrencies, tech companies, venture funds, and real estate.
Following the sale of shares in AI startup Anthropic, where FTX had previously invested $500 million, the distressed exchange found $6.4 billion in cash. It is important to note that the amount also includes assets controlled by debtors and liquidators.
However, the distribution has faced dissatisfaction among some clients due to settling customer claims based on lower cryptocurrency prices from November 2022, when FTX filed for bankruptcy.
For instance, clients holding 10 Ethereum’s native token ETH in their accounts will receive approximately $12,000 in cash, significantly lower than the asset’s current worth of around $29,000 as ETH trades at $2,900.
Despite objections, the court has approved creditor voting on the liquidation plan, and if passed by the necessary number of votes, the plan will be implemented after final court approval.
Buying Frenzy For Bitcoin, Ethereum, And Solana?
Key dates to watch for further developments include August 16, 2024, which marks the deadline for FTX customers to vote on the bankruptcy wind-down payments, and October 7, 2024, when Judge John Dorsey will consider approving the FTX bankruptcy plan.
If the current plan is approved, clients can expect payouts to begin by the end of Q3, 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 finds itself in significant price declines.
Related Reading
Bitcoin has fallen over 21% in the past month at one end of the market, from a high of $71,000 to a current trading price of $56,400. Meanwhile, Solana surpasses BTC’s losses with a 22% drop in the same time frame, currently trading at $134.
Furthermore, it is expected that the ongoing selling pressure from the US and German governments witnessed over the past month could continue for the rest of the year, and the cash injection from FTX to crypto investors could help mitigate the expected selling pressure.
The researcher points out that since most 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 from DALL-E, chart from TradingView.com
This news is republished from another source. You can check the original article here
