• May 21, 2024

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K33: FTX Repayments Might Have Bullish Effects on Crypto

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A report published on Tuesday by digital asset brokerage firm K33 suggests that repayments from the collapsed crypto exchange FTX could potentially have a bullish effect on the crypto market.

“While Mt. Gox and Gemini creditor repayments represent a bearish overhang in the market, FTX’s cash repayment may be viewed as a bullish overhang,” K33 stated in the report.

“Both Mt. Gox and Gemini will reimburse creditors in-kind, whereas FTX has sold off assets to pay creditors in cash,” K33 continued.

“On net, buying pressure from cash recipients may neutralize selling pressure from in-kind repayments.” In-kind repayments involve settling debt with a good or service instead of cash, while buying pressure refers to the market demand for a crypto asset.

FTX owed its top 50 creditors approximately $3.1 billion, with total liabilities around $9 billion, following its collapse in November 2022.

The FTX estate has since liquidated various assets it owned, including portions of its $7.5 billion in locked Solana and $1 billion in Grayscale shares, after the fund converted to a spot Bitcoin exchange-traded fund.