Author: Mustafa Mulla

Mustafa has been writing about Blockchain and crypto since many years. He has previous trading experience and has been working in the Fintech industry since 2017.

Jul 8, 2024 17:01

A large flow of capital is coming for Bitcoin, Ethereum, Solana, and many more,  as FTX, the crypto exchange that went bankrupt in November 2022 is poised to refund $16 billion in cash to its customers.

Meanwhile, prominent on-chain crypto analyst Chain Mind has shared insights on the potential impact, suggesting this could be a pivotal moment for both retail and institutional investors.

$16 Billion Of FTX Refund

FTX, which went bankrupt in 2022, has confirmed a refund plan amounting to $16 billion in cash for its users. This significant amount of money is expected to re-enter the cryptocurrency market, potentially driving substantial growth. 

$16B in cash will appear as buying pressure in Q4!

In 2022 FTX crushed the crypto market, now it will do the opposite

It may be ur last chance to accumulate the right positions

A🧵on where the $16B in cash will flow and what to buy👇 pic.twitter.com/3aZRfFtDWL

— 𝗖𝗛𝗔𝗜𝗡 𝗠𝗜𝗡𝗗 ⛓🧠 (@0xChainMind) July 7, 2024

According to Chain Mind, this influx of cash is not just about returning Bitcoin or Ethereum but injecting fresh capital into the market. Meanwhile, the potential growth triggered by this reinvestment could be substantial. 

An FTX attorney confirmed that the company reached an agreement with the U.S. government and sold assets, including investments in cryptocurrency, tech companies, venture funds, and real estate. While some clients have complained about receiving refunds based on the lower crypto prices at the time of FTX’s bankruptcy in 2022, the refund plan is almost accepted.

Details of the Refund Plan

The current FTX refund plan categorizes users into different classes based on their claims:

Convenience Class: Claims under $50,000 will receive 118% payouts within 60 days post-plan activation.

Larger Claims: Claims over $50,000 will receive payouts between 127-142%, with the initial distribution expected by year-end.

6/➫ So here are 2 key dates that determine when the acceptance will happen and when the influx will occur

August 16, 2024: Deadline for voting for FTX customers

October 27, 2024: Approving of FTX plan or not

As I already mentioned, the plan will most likely be confirmed pic.twitter.com/qkcyniPPfz

— 𝗖𝗛𝗔𝗜𝗡 𝗠𝗜𝗡𝗗 ⛓🧠 (@0xChainMind) July 7, 2024

Key dates to watch are August 16, 2024, for the voting deadline for FTX customers, and October 27, 2024, for the approval of the refund plan. 

Additionally, the plan includes waiving all client priority actions and accruing 9% interest on client claims to compensate for the time value of their funds. International holders, however, face a 30% withholding tax on distributions.

Who Will Benefit?

The compensation is primarily aimed at regular retail traders who are expected to actively reinvest in the cryptocurrency market. Chain Mind predicts that the liquidity will initially flow into less risky, long-term investments like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL). 

Subsequently, investments may diversify into altcoins associated with popular narratives of this cycle, such as RWA, AI, DePin, GameFi, and Meme coins.

Interestingly, the approval and distribution of these payouts coincide with the end of the U.S. elections. With Donald Trump leading in the polls and known for his support of cryptocurrencies, his potential election could further boost the market. 

Chain Mind suggests that the $16 billion cash flow into crypto, combined with Trump’s support, could provide the necessary boost for significant growth.