FTX to Distribute $16 Billion to Its Customers

The bankruptcy of FTX could have unexpected effects on the crypto market. While the defunct exchange is preparing to redistribute $16 billion to its aggrieved customers, experts predict significant buying pressure on Bitcoin and Solana. This massive injection of liquidity could well energize a market that has been in decline for several months.

A Welcome Influx of Capital for Bitcoin and Solana

The distribution planned by FTX represents a considerable windfall for the crypto ecosystem. A large portion of these $16 billion is likely to be reinvested in digital assets. Investors, already familiar with this market, could indeed be tempted to bet on cryptos again.

This massive arrival of liquidity occurs in a bearish market context. Bitcoin has lost more than 20% of its value over the past month, while Solana shows a 22% drop. The injection of new capital could therefore act as a catalyst and restart the bullish dynamic that investors have been eagerly awaiting.

Furthermore, this distribution could counterbalance the selling pressure exerted by the German government. They have indeed carried out significant sales of cryptocurrencies in recent weeks, weighing down prices.

Related: Germany Holds $2.2 Billion in Bitcoin, Representing 10% of the Total Trading Volume

FTX’s Distribution Plan

The process of distributing FTX funds is set in a particular context. The key dates to remember are August 16, 2024, the deadline for creditor voting, and October 7, 2024, for the final approval of the liquidation plan.

If the schedule is respected, payments should begin by the end of the third quarter of 2024. This period coincides with the US elections, traditionally synonymous with increased volatility in the financial markets. The influx of liquidity from FTX could thus amplify price movements, particularly for Bitcoin and Solana.

The potential approval of a Solana ETF, following the application by Van Eck and 21Shares at the end of June, could also be an additional volatility factor. However, Gracy Chen, CEO of Bitget, remains cautious:

While the distribution of FTX funds could create short-term buying pressure, the long-term impact remains uncertain. Other factors such as regulations and broader market sentiment will also play crucial roles.

The distribution of FTX funds could well mark a turning point for the crypto market. While Bitcoin and Solana are going through a difficult phase, this injection of fresh capital could breathe new life into the sector. Investors remain cautious, however, aware of the inherent volatility of these assets.