In a recent development in the cryptocurrency world, FTX, the exchange previously run by Sam Bankman-Fried, who is now convicted, is set to distribute a massive $16 billion in cash to its customers. This move could potentially lead to significant price increases for Bitcoin (BTC) and Solana (SOL).
According to crypto researcher Xremlin, a large portion of this cash is expected to flow back into the crypto market, acting as a catalyst for growth by the end of the year. The distribution of $16 billion is seen as a significant event, as it involves returning a considerable amount of cash to individuals already involved in the crypto space. Xremlin believes that many customers will reinvest this money in the market, particularly in tokens like Bitcoin and Solana, creating substantial buying pressure and price growth for these cryptocurrencies.
The source of this 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 included investments in various areas such as cryptocurrencies, tech companies, venture funds, and real estate. After selling shares in AI startup Anthropic, FTX managed to obtain $6.4 billion in cash, along with assets controlled by debtors and liquidators.
However, not all clients are pleased with the distribution plan, as it settles customer claims based on lower cryptocurrency prices from November 2022 when FTX filed for bankruptcy. For example, clients holding 10 Ethereum’s native token ETH could receive $12,000 in cash, significantly less than the current value of about $29,000. Despite objections, the court has approved creditor voting on the liquidation plan, which will be implemented if passed by the necessary votes after final court approval.
Key dates to watch for further developments include August 16, 2024, the deadline for FTX customers to vote on 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, payouts could start by the end of Q3, potentially providing liquidity for token purchases, coinciding with the US elections and potentially increasing market volatility.
Bitcoin and Solana have experienced significant price declines recently, with Bitcoin falling over 21% in the past month to $56,400 and Solana dropping 22% to $134. It is expected that ongoing selling pressure from the US and German governments could continue throughout the year, and the cash injection from FTX to crypto investors might help counteract this pressure.
Given that most affected FTX customers are retail crypto investors, a considerable amount of the distributed money is likely to flow back into cryptocurrencies, with Bitcoin, Ethereum, and Solana being the primary beneficiaries of this liquidity. This could potentially fuel a bullish trend in the crypto market amidst significant price declines.