Despite last week’s downturn amid heightened tensions in the Middle East, the bullish Q4 outlook for bitcoin remains intact. Analysts from K33 attribute this resilience to better-than-expected U.S. jobs data, a market recovery over the weekend, and positive developments in the FTX estate creditor repayment process.
Nearly two years after the collapse of the crypto exchange, Judge John Dorsey in the U.S. Bankruptcy Court for the District of Delaware approved FTX’s reorganization plan during a hearing on Monday. This approval brings creditor repayments one step closer.
Approximately 94% of creditors in the “dotcom customer entitlement claims” class, representing about $6.83 billion in claims, voted in favor of the reorganization plan. However, it faced criticism from Sunil Kavuri, a representative of the largest creditor group, who argued that the estate should pay out crypto assets in kind rather than in dollar value.
In a Tuesday report, K33 analysts Vetle Lunde and David Zimmerman estimated that payouts would commence late this quarter and extend into early Q1 of 2025, within a 60-day window of the court’s effective date, expected around mid-November.
According to the analysts, “Debtors will have 60 days to repay individual customers with claims under $50,000, accounting for approximately $1.2 billion worth of assets. Larger creditors are anticipated to receive their $9 billion payouts in February 2025.”
The critical question for bullish investors is how much of these repayments will likely re-enter the market, especially given that the crypto assets have already been converted into fiat, reducing sell-side pressure.
From the total claims of $14.4 billion to $16.3 billion, analysts estimate that $3.9 billion has been bought by credit funds, unlikely to return to the market. They also highlight that approximately 33% of the remaining claims are held by sanctioned countries, insiders, and those without KYC verification.
This leaves about $8 billion, with analysts predicting that 20% to 40% will be re-deposited back into crypto markets—about $2.4 billion based on the midpoint of this range—given that “FTX’s trader base consisted of crypto-native aggressive risk takers.” However, they note that this will likely occur in multiple waves over the next year, indicating a potentially soft overall impact on the crypto market.
Meanwhile, traders remain cautious as altcoins struggle to maintain momentum. Despite its correction from all-time highs of nearly $74,000 in March, bitcoin is currently trading at $62,415, reflecting a 40% increase year-to-date. Its market dominance has risen from 52.5% to 58% this year.
Conversely, ether’s market dominance has decreased from 16.7% to 13.8%, with the ETH/BTC ratio at multi-year lows below 0.039, indicating trader caution regarding market beta.
Only 21 of the top 100 cryptocurrencies by market cap have outperformed bitcoin in 2024, primarily consisting of memecoins and new Layer 1 projects. In contrast, 48 cryptocurrencies in the top 100 have generated negative returns for the year, with only 25, including ETH, SOL, AAVE, DOGE, and TRX, posting positive year-to-date returns while underperforming bitcoin.
These statistics underscore that the gains experienced in the first nine months of 2024 have been largely concentrated in bitcoin, while most altcoins have not participated in the uptrend.
Furthermore, bitcoin premiums on the CME are higher than ether premiums, reflecting reluctance to chase market beta in the current environment. However, a widening futures contango suggests bullish expectations for the end of the year if the current trend continues.
Disclaimer: The Block is an independent media outlet providing news, research, and data. As of November 2023, Foresight Ventures is a majority investor in The Block. The Block operates independently to deliver objective information about the crypto industry.
