Massive FTX Liquidation To Impact Crypto Markets?

By Vince • September 14, 2023 11:03 am • Comments

There is currently a massive divergence of opinion on whether or not the recently announced FTX liquidation will affect the crypto markets.

FTX has received permission from the courts to sell off roughly $3.4 billion in cryptocurrencies that it has recovered while in bankruptcy.

This has sparked fears that the crypto markets are about to tank and Solana’s price has already responded negatively to the recent announcement.

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To put things in perspective, the current crypto market cap stands at ~$1.15 trillion. A $3.4 billion dump represents a fraction of a percent of that total market cap.

Here’s a snapshot of FTX’s token and coin liquidations:

Crypto influencer Laura believes that the liquidation will have little effect on the markets, she writes:

“In reality, their selling capacity is limited to $100M per week, though it could potentially rise to $200M weekly. Also, a portion of their assets are locked for extended periods. The majority of FTX’s Solana holdings won’t be accessible until 2025. Keep your calm and don’t let the chaos influence you.”

According to Bitcoinist:

Only approximately 7 million SOL, a majority of which have already been liquidated, can be sold. This factor plays a pivotal role in shaping market expectations, as the anticipation of a massive sell-off in Solana may not materialize due to the limited supply available for sale.

According to Van de Poppe’s analysis, FTX’s approved liquidation plan aims to address its liabilities through a gradual asset sell-off.

Cryptocurrency analyst Marty provided an update on some of the holdings the bankrupt FTX will be liquidating:

“This is Alamedas Solana wallet which has the rights to the 26,740,743 staked $SOL from 2025-2028. This wallet’s keys will be sold in the FTX liquidation. Not the $SOL which cannot be unlocked until 2025-2028.

As I’ve been posting for weeks – FTX/Alameda only holds 7m $SOL and $WSOL which has already been pre-sold to the Solana Foundation. When the transfers happen later this week I will share.

But no, the 26m $SOL is locked and only the key holder of this wallet can unstake it in the future.”

One user provided a price outlook for Solana: “TVL is at all-time lows. $1,160,000,000 liquidation coming from FTX. The chart looks terrible. There’s some support at $16. If we break through it, $SOL is likely going to retest its lows.”

U Today ultimately concluded:

What is the takeaway here? Simple. Do not let the term “liquidation” throw you off. FTX is not dumping SOL tokens en masse.

The locked SOL tokens are staying put until 2025-2028, and the keys to that treasure will change hands — not the treasure itself.

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