FTT Price Increases Over 30% After FTX Reorganization Plan — Path Ahead Remains Murky
What to Make of FTT Price Bounce? | Credit: Getty Images
Key Takeaways
- FTX announced a plan for repaying customers affected by their bankruptcy.
- The FTT price increased 40% shortly after the announcement but could not sustain its increase.
- If the FTT correction finally over, or was the increase just an anomaly in the long-term bearish trend?
The FTT price fell over 95% as FTX declared bankruptcy in November 2022. While the price bounced afterward, it created a lower high and started another correction in December 2023.
Despite this long-term bearish outlook, a notable bounce began on May 8, shortly after FTX announced their reorganization plan for their bankruptcy proceedings. Can the favorable news, along with the price momentum, catalyze an FTT price recovery?
FTX Announces Plan of Reorganization
FTX announced the details of its plan of reorganization on May 8, aiming to reimburse those that lost during the exchange’s bankruptcy. According to the firm, there will be between $14.5 and $16.3 billion available for distribution, based on the monetization of Alameda Research’s assets.
It is worth noting that the assets sold at a discount, especially SOL. To be precise, SOL has been sold at auctions at prices near $60. While this is well below the current $145 price of SOL, it is significantly above the $10 price at the time of the bankruptcy.
There are issues regarding the FTX reorganization plan. Even though users are being paid in full, this calculation is made on the price of their assets at the time of the bankruptcy, rather than their current price.
For example, those that held BTC are reimbursed only $16,800 for each BTC they held, rather than the $62,100 Bitcoin is currently worth. FTX aims to make this right this by offering 118% of their value to those holding less than $50,000, while 9% interest to those above, in order to account for the time value of their investment.
However, as outlined above, this is not close to being fair value. The BTC price has appreciated 260% in the 19 months since the crash. In comparison, the interest would amount to only 14.25% during this time. In the case of SOL, FTX is selling at an average price of $60 and then repaying users at around $11.
The U.S. bankruptcy court has not finalized the plan yet.
FTX Breaks out from Long-Term Resistance Trend Line
Shortly after the announcement, the FTT price began an upward movement and broke out from a long-term resistance trend line, which existed for 143 days. Breakouts from such long-term resistances often lead to a notable movement in the other direction.
FTT surged by 38%, leading to a high of $2.30. However, it failed to sustain its upward movement and has created a long upper wick (red icon).
Despite this weakness, technical indicators are turning bullish. This is visible in both the RSI and MACD, which are trending upward. Also, the RSI is above 50 and the MACD is in positive territory (green circle).
FTT Price Prediction: Is the Correction Finally Over?
Similarly to the price action and indicator readings, the wave count signifies the FTX correction is finally complete. It shows that FTT completed a five-wave upward movement between October and December 2023 (white).
FTT has corrected since, in a decline that has been much longer than the preceding increase. The correction resembles an A-B-C structure, where wave C had 0.618 times the length of wave A.
The breakout from the descending resistance trend line alongside the bullish RSI and MACD readings align with this count.
If the count is accurate, the FTT price has begun a new upward movement and will eventually increase above its December 2023 high of $6.06. There is intermediate resistance at $3, a breakout above which will confirm the validity of the count.
On the other hand, a daily close below the trend line will put this bullish count at risk.
FTT Correction May be Over
To conclude, the May 8 bounce goes a long way in confirming the long-term FTT correction is over. The price action, indicator readings and wave count have all aligned and support the continuing of the increase. A breakout above $3 will confirm the correction is complete.
