Bitcoin and crypto market survives supply overhang as Celsius repayment distribution cools

Celsius, a defunct crypto lending company, has repaid more than half of its creditors, according to a filing made on Monday. The $2.5 billion distribution had a limited impact on Bitcoin's price, which has historically posted price swings during creditors' repayments.

Crypto market unshaken by Celsius repayment distribution

Defunct crypto lender Celsius has successfully distributed over $2.5 billion as repayment for its creditors, according to a court filing it made on Monday. The filing revealed that 251,000 creditors claimed the $2.5 billion distribution, representing more than 93% of the total $3 billion worth of assets the company owes 372,000 customers after its collapse in 2022.

In January, Celsius started the distribution process, making payments via Coinbase, PayPal and cash transfers. However, over 121,000 creditors have yet to claim their repayments due to complications with getting the refund, including claims of "disinterest" among some.

According to the company, around 64,000 of these 121,000 creditors own less than $100 worth of crypto, with another 41,000 owning between $100 to $1000 in various crypto assets.

"Given the small amounts at issue for many of these creditors, they may not be incentivized to take the steps needed to successfully claim a distribution," the firm mentioned in the filing.

The firm claims that it will retry the process of distribution again every two weeks to these creditors via Coinbase, with redeemable PayPal claim codes available at any time. According to Arkham Intelligence data, Celsius currently holds only $5 million worth of crypto on-chain.

Meanwhile, the crypto market appears unphased by the recent ongoing distributions, as asset prices have yet to experience heavy declines. This negates historical records where supply overhangs stir massive FUD (fear, uncertainty and doubt) among investors and eventually cause an increased sell-off.

In addition to the Celsius supply overhang, the crypto market has managed to survive heavy selling pressure from Mt. Gox distributions and the German government BTC sale in the last two months.

According to Glassnode data, most Bitcoin long-term holders have remained volatility-resistant, holding onto their tokens despite the supply overhangs in the past months. A similar trend is also visible in the high negative Bitcoin exchange net flows in the past few months, per CryptoQuant's data. Negative exchange net flows suggest investors are either buying more tokens or moving their assets to private wallets for long-term holding.