Crypto News – Bullish Overhang Effect: Exploring the Relationship Between FTX Repayments and Crypto Market Trends
Crypto News – A minimum of $14.5 billion in cash will be given by FTX to users who lost money as a result of the exchange going bankrupt. According to May 14 research from K33 analysts Vetle Lunde and Anders Hesleth, these dividends would probably result in a “bullish overhang” for the market. The analysts contrasted the scheduled cash repayments from FTX with the planned crypto-based repayments from Mt. Gox and Gemini, which are “currently valued at $10.6 billion.”
Not all creditor repayments are bearish.
The analysts
Lunde and Hesleth came to the conclusion that the selling pressure from in-kind recipients would be offset by the buying pressure from cash users.
According to Analysts, Repayment Pressures are Impossible to Predict in Advance
The experts stated that the timing of the repayments might play a crucial role in forecasting their impact on the market, despite the fact that it would be “impossible” to estimate the net purchasing or selling pressure from these repayments in advance. Early June is when Gemini is projected to refund $1.7 billion, while October 2024 is when Mt. Gox is expected to reimburse $8.9 billion.
The analysts stated that most FTX creditors were anticipating repayments to be delivered later this year, although they did caution that there was still some uncertainty surrounding the anticipated repayment date because the court had not yet approved the FTX repayment arrangement.
The different timing of these repayments represents yet another indication of a slow summer in the market and a solid end to the year.
The analysts
FAQ
What Does Market Overhang Mean on the Exchange?
Market overhang is the accumulation of selling pressure for stock among traders who have largely refrained from doing so because they are afraid of the stock’s value declines.
What is Buying Pressure?
Indicating that most traders believe the market price will rise, buying pressure arises when the majority of traders purchase.
What is Bankruptcy?
Through the legal process of bankruptcy, individuals or other entities who are unable to pay their creditors back can seek partial or complete debt relief. Most of the time, the debtor initiates the court order that imposes bankruptcy.
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