Bullish bitcoin Q4 thesis bolstered by FTX repayment developments, K33 analysts say
2024-10-08

Despite last week’s downturn amid heightened tensions in the Middle East, better-than-expected U.S. jobs data, a subsequent recovery over the weekend and positive developments in the FTX estate creditor repayment process keep a bullish Q4 for bitcoin intact, according to analysts at K33.
Nearly two years after the crypto exchange’s collapse, Judge John Dorsey in the U.S. Bankruptcy Court for the District of Delaware approved FTX’s reorganization plan during a hearing on Monday, bringing creditor repayments one step closer.
About 94% of creditors in the “dotcom customer entitlement claims” class who returned their ballots — representing about $6.83 billion in claims by value — had voted in favor of the reorganization plan. However, the plan garnered criticism from Sunil Kavuri, a representative of the largest FTX creditor group, who said the estate should pay out crypto assets in kind rather than the dollar value when FTX filed for bankruptcy in November 2022.
In a Tuesday report, K33 analysts Vetle Lunde and David Zimmerman estimated payouts would begin late this quarter and into early Q1, 2025, within a 60-day window of the court’s effective date, which is still uncertain but expected to be in mid-November.
“Debtors will have 60 days to repay individual customers with claims under $50,000, representing approximately $1.2 billion worth of assets. Larger creditors (entitlement class) are expected to receive their $9 billion payouts in February 2025,” Lunde and Zimmerman wrote.
The question for bulls is how much of the repayments are likely to reenter the market, especially as the crypto assets have already been converted into fiat, meaning that the sell-side pressure from the estate has played out.
Of the $14.4 billion to $16.3 billion in claims, the analysts estimated that $3.9 billion had been bought by credit funds and unlikely to return to the market. They also estimated around 33% of the remaining claims were owned by a subgroup of sanctioned countries, insiders and those without KYC verification who will not be able to claim.
After the analysts’ assumptions, that leaves $8 billion, of which they anticipate 20% to 40% being deposited back into crypto markets, or approximately $2.4 billion taking the middle of that range, as “FTX’s trader base consisted of crypto-native aggressive risk takers.” However, “this will likely unfold in multiple waves throughout the next year, meaning its overall impact on the crypto market may be soft,” they said.
FTX claim estimates. Image: K33.
Traders remain cautious of market beta as altcoins struggle to keep up
Despite its correction from all-time highs of nearly $74,000 in March, currently trading for $62,415, according to The Block’s Bitcoin Price Page, the foremost cryptocurrency remains 40% up year-to-date, with its dominance in the market rising from 52.5% to 58% this year.
Meanwhile, ether’s dominance has dropped from 16.7% to 13.8%, with the ETH/BTC ratio at multi-year lows below 0.039 — indicating traders remain cautious of market beta, Lunde and Zimmerman said.
In fact, only 21 of the top 100 cryptocurrencies by market cap have outperformed bitcoin in 2024, according to K33, the majority of which being memecoins, illiquid coins or new Layer 1 projects, they said. Some 48 cryptocurrencies in the top 100 have generated negative returns for the year, with 25, including ETH, SOL, AAVE, DOGE and TRX, seeing positive year-to-date returns while underperforming BTC.
Year-to-date change in market cap dominance. Image: K33.
“These stats highlight that the upside experienced in the first nine months of 2024 has largely been concentrated to BTC, while a majority of altcoins have failed to participate in an uptrending market,” the analysts said.
Bitcoin premiums on the CME sitting higher than ether premiums reflect this reluctance to chase beta in the current environment, according to the analysts. However, a widening futures contango, which refers to the gap between the futures and spot prices, also indicates bullish end-of-the-year expectations,” if the trend continues, they added.
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