FTX has started the process of repaying its creditors, injecting liquidity into the market and exerting downward pressure on the price chart. This has resulted in Bitcoin struggling to build the buying momentum that analysts had expected to see after FTX’s repayments.
FTX has initiated the repayment process on February 18, marking a step towards resolving a crisis that had a significant impact on the market. Many individuals affected by the collapse of the exchange suffered substantial financial losses, including those who had earmarked funds for major life events such as purchasing homes or funding their children’s education.
Creditors who lost up to $50,000 will receive 100% of their claimed amount plus an annual interest rate of 9%, calculated from November 11, 2022, the date when FTX declared bankruptcy. According to a tweet by FTX creditor Sunil, the first phase of repayments amounts to $1.2 billion, with approximately $800 million already distributed to around 162,000 accounts, covering 35% of the eligible 460,000 accounts.
The distribution of funds involves half of the money being directly paid to the original account holders, while the other half is allocated to those who have acquired the debts. This repayment method caters to both the initial victims of the FTX collapse and the secondary parties who took on the risk by purchasing these debts.
Many recipients of FTX repayments are expected to reinvest their funds in cryptocurrencies, with some opting for Bitcoin or Bitcoin ETFs, while others may explore altcoins like Ethereum. However, the impact of these repayments on Bitcoin’s price remains uncertain, as the buying demand for BTC failed to show significant traction.
In recent hours, the price of Bitcoin has experienced a notable decline, dropping from a high of $96,730 and now targeting consolidation around $94,000.
The market’s response to these repayments is still unclear, with some experts speculating that the injected funds could enhance liquidity in the market. However, since the repayment plan primarily targets creditors with smaller claims, it may not have an immediate substantial impact on market prices. Moreover, many recipients may opt for more secure investments over re-entering a volatile market.
Bitcoin’s price has unexpectedly declined following the repayment process, with the RSI level hitting the selling zone at 31, indicating a potential continuation of the downward trend. Buyers are currently eyeing a retest of the $92,000 region to confirm further trends. A rebound above this zone could lead to consolidation below $95,000, while a drop below $92,000 might push the BTC price towards $89,000.
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