US Shutdown Anxiety Meets $1.6B FTX Repayment

FTX is in the process of repaying $1.6 billion to its creditors as the exchange’s repayment procedures near their final stages.

While the $1.6 billion is a modest sum, its timing could provide a key defense for the market against the negative impacts of a potential US government shutdown.

$1.6 Billion in Liquidity Returns to Crypto Investors

According to Sunil Kavuri, the head of FTX’s largest creditor group, the repayment will allow small claimants with claims under $50,000 to recover more than 120% of their principal.

Sponsored

Sponsored

In contrast, claimants with claims over $50,000 will recover an additional 72.5% of their principal. Their total recovery is now 78.2%, adding to the 5.7% they were paid on May 30.

The repayment rate for US customers is estimated to be 40%. In contrast, the total repayment rate for all customers worldwide is 95%. BitGo, Kraken, and Payoneer will distribute the funds.

A Needed Liquidity Injection?

Kavuri stated on X that “claims of a $5 billion repayment are unfounded.” Some analysts are hopeful that the new liquidity released from FTX could trigger a new rally. This is because investors may use the repaid funds to repurchase crypto.

The altcoin market is eagerly awaiting this additional liquidity. It just experienced a minor “Altcoin Season” from September 18 to 28. As of press time, the CMC Altcoin Season Index is at 63. An index of 75 or higher is considered a true altcoin season.

“Altseason is just around the corner. And FTX will pour billions of dollars into the market. This fresh money is ready to re-enter the market, and usually this is the start of the altseason,” crypto influencer Ajay Kashyap stated on his X account.

The repayment’s timing, which coincides with the US government shutdown, is also a cause for optimism. If Congress fails to agree on the 2025 government budget by September 30, the US federal government will shut down most of its operations.

This will take effect on October 1, at 12:01 a.m. EST, with the exception of essential services.

A government shutdown could increase market uncertainty and trigger selling in the crypto market. The influx of new liquidity from the FTX repayment could help cushion against this potential negative impact.