FTX Crypto Holdings Unlikely to Cause Market Flooding, Says Coinbase
Coinbase’s head of institutional research, David Duong, assures traders that the upcoming liquidations of bankrupt crypto exchange FTX are unlikely to flood the market. In his analysis, Duong explains that FTX has set weekly sell limits of $50 million for the initial phase and $100 million for subsequent weeks.
According to court documents, FTX held approximately $1.162 billion worth of Solana (SOL), $560 million worth of Bitcoin (BTC), $192 million worth of Ethereum (ETH), and $1.49 billion worth of other digital assets as of August 31st.
Duong emphasizes that there are strict controls in place for selling insider-affiliated tokens, requiring a 10-day advance notice to committees. He also highlights that a significant portion of FTX’s SOL holdings will be locked up until 2025 due to the vesting schedule.
In terms of the macroeconomic outlook, Duong predicts that the U.S. Federal Reserve will ease monetary policy in the first or second quarter of 2024, supporting Bitcoin as an alternative to the traditional financial system.
Hot Take: FTX Liquidations Expected to Be Controlled and Impact Limited
The liquidation process of bankrupt crypto exchange FTX is not anticipated to overwhelm the market with an excessive supply of cryptocurrencies. With weekly sell limits and strict controls in place for certain token sales, FTX’s impact on the market is expected to be manageable. Additionally, a significant portion of FTX’s SOL holdings will remain locked up until 2025. These measures provide some reassurance to traders concerned about potential market disruption caused by the liquidations. Furthermore, the overall macroeconomic outlook supports Bitcoin as a viable alternative within a dual expansionary fiscal and monetary regime.
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