10 months on from what many would deem as crypto’s biggest catastrophe, FTX is now awaiting a court approval that could see it liquidate $3.4 billion worth of crypto coins. Understandably, onlookers predict that if approved, the mass sell-offs could leave even bigger bearish impacts across crypto prices and overall sentiment.
The former Sam Bankman-Fried-led crypto exchange could get the green light and begin liquidations by tomorrow (September 13th), when company representatives appear at Delaware’s Bankruptcy Court.
With $3.4 billion worth of crypto tokens needed to be sold, the now-defunct CEX’s court documents indicate that it wishes to offload up to $100 million worth of crypto each week (which could sometimes stretch to $200 million for individual assets). To do so, the company is now being run by a team of legal bankruptcy experts who’ve hired digital asset and blockchain firm ‘Galaxy Digital’ to oversee the sale and management of recovered user funds.
This mass sum is said to be comprised of $685 million worth of locked Solana (SOL), $268 million of Bitcoin (BTC), $90 million of Ethereum (ETH), $42 million of Dogecoin (DOGE), and $529 million of FTX’s native FTT token.
The likes of Aptos (APT), Polygon (MATIC), XRP, and other stablecoins are also included in the January 2023-recorde portfolio, as well as an additional $1.2 billion is held in crypto on third-party exchanges.
Intuitively, selling pressure to the tune of $3.4 billion is more than enough to cause a rumble across the crypto space, which is what many predict will happen once sales begin.
In-fact, some are even saying that the speculation surrounding the story has already prompted heavier flows of bearishness. For example, with FTX holding almost 10% of all Solana, SOL (and its price) seemingly failed to capitalise on the bullish partnership between Visa and USDC Solana.
The same can also be said for Ethereum, whose price movements are yet to reflect the excitement surrounding Ethereum ETF developments.
Nonetheless - and as these scenarios involving SOL and ETH demonstrate - speculation can often be a key driving force in market movements, meaning in practice, the actual sell-offs of FTX’s $3.4 billion crypto assets may not plunge us as deep into the red as we may assume.
It’s also uncertain how the sell offs would actually affect today’s market conditions, as per the words of crypto intelligence firm Messari, “The relevant figure isn't the absolute value of the tokens held, but rather their amount relative to each asset's actively traded volume”.
Further, Messari went on to state:
“While SOL and APT have sizable USD figures and relative market volume impacts, these assets are held on the Alameda and venture side of the house and are largely comprised of vesting tokens that are not immediately liquid in open markets”.
FTX LIQUIDATIONS UPDATE
— Messari (@MessariCrypto) September 11, 2023
FTX liquidators hold approximately $1.3 billion of liquid crypto assets (excluding stablecoins) which have been dragged down by fear of FTX liquidations potentially beginning Wednesday.
Largest holdings: $SOL, $BTC, $ETH, $APT, $DOGE, $TRX, $MATIC… pic.twitter.com/ki3l6xKgPf
Here, for example, FTX’s locked SOL tokens have a vesting period until at least 2025, meaning potential buyers would have to abide by such a schedule until it expires.
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This article is intended for educational purposes and is not financial advice.
