Sell-Off Anticipation in Crypto Market Amid FTX Bankruptcy Proceedings
The crypto market is bracing itself for a possible sell-off following the bankruptcy proceedings of FTX. On September 13, the Delaware bankruptcy court is expected to rule on the $3.4 billion asset sale sought by FTX lawyers.
According to data analytics platform Messari, SOL, BTC, ETH, APT, DOGE, TRX, and MATIC are the largest holdings in question. However, liquidity is more crucial than the dollar value of these assets, as Messari explains. The actively traded volume of a token determines its impact rather than the total amount held.
“For example, FTX/Alameda’s BTC holdings ($353M) is roughly 1% of BTC’s weekly traded volume, meaning the market can absorb much of the selling, and the same goes for ETH.”
Although Solana has the highest sell pressure ratios among FTX and Alameda’s top assets, its supply of $720 million SOL is locked and will be gradually unlocked at a rate of $9.2 million per month, minimizing the liquidity problem.
SOL is not the only token in strife
In contrast, DOGE, TRX, and MATIC are less liquid. The $20-$30 million in FTX accounts make up 6-12% of the weekly trading volumes for these assets, posing a potential price shock.
Currently, SOL is trading at $27.97, down nearly 7% in the past week. However, it has recovered from its initial dip to $27.15.
The filing made on August 24 proposes that Galaxy Digital, Mike Novogratz’s asset management firm, manage the token sale. The schedule suggests an initial release of $100 million worth of crypto, potentially increasing to $200 million per week.
Hot Take: Crypto Market Braces for FTX Bankruptcy Sell-Off
With FTX’s bankruptcy proceedings and the upcoming asset sale ruling, the crypto market is on edge. The liquidity of tokens, such as SOL, BTC, ETH, DOGE, TRX, and MATIC, is a critical factor in determining their vulnerability to price shocks. While SOL’s locked supply mitigates the impact, less liquid assets like DOGE, TRX, and MATIC face greater risks. As the market anticipates a possible sell-off, investors should closely monitor the developments and consider the actively traded volume of tokens. The outcome of the bankruptcy proceedings will have significant implications for the crypto market as a whole.
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