Altcoins like Solana (SOL) in Jeopardy As FTX Liquidation Event Approaches
Key Takeaways:
FTX has filed for a US Court permission to liquidate its crypto holdings
The defuncted crypto exchange has the majority of its crypto assets in altcoins
Solana (SOL) makes up for a large chunk of the altcoin stash
YEREVAN (CoinChapter.com) — In a bid to settle its financial obligations amidst bankruptcy proceedings, embattled cryptocurrency exchange FTX is poised to offload a substantial $3.4 billion worth of cryptocurrencies.
The exchange is diligently working to secure court approval for this ambitious liquidation effort, with a decision expected in the next hearing on Sep. 13. Fears of the possible upcoming FTX liquidation event sent tremors in the industry.
Bitcoin (BTC), the market leader, briefly fell below the $25,000 mark, according to TradingView charts.
According to media reports, an intriguing caveat in FTX’s court documents stipulates that the exchange can only sell up to $100 million worth of assets per week. They may occasionally stretch this cap to $200 million.
Nonetheless, the incoming off-ramping event could hit altcoins extra hard.
Solana (SOL) price to take a blow from the FTX liquidation event?
Taking a closer look at the top 10 holdings within FTX’s altcoin portfolio, several coins stand out. Solana (SOL), Ethereum (ETH), Aptitude (APT), and Ripple (XRP) hold significant positions.
According to market observers, Solana will likely be among the worst hit. As per available records, Solana comprises the largest portion of FTX asset holdings, with an approximate value of $685 million.
Moreover, according to reports, FTX estate collectively possesses $1.5 billion in cryptocurrency assets within the Solana network.
TradingView data shows SOL is down 28% in the past month alone. At the time of writing, it exchanges hands at around $18 per token.
Year to date, the 9th largest token based on market cap has shed 80% of its price and remains over 90% below its all-time high of $260.
However, other traders have pointed out that SOL holders have no reason to worry. Even if the FTX gets court approval, it won’t dump all its tokens simultaneously. It will take months, if not years, before the exchange offloads all its holdings.
Moreover, a recent Messari report points out that FTX-affiliated Alameda Research has vested most of its SOL holdings. According to the report, 645,000 SOL tokens become available monthly. This translates to a value of $9.2 million.
This figure represents only 1.2% of the total trading volumes in the context of weekly trading activity.
While some experts rubbish the FUD created by the news, others see the SOL price falling to $14 in the immediate future. We will have to wait for the ruling to see if traders stay put and HODL or if they will dump their holdings.
The post Altcoins like Solana (SOL) in Jeopardy As FTX Liquidation Event Approaches appeared first on CoinChapter.
Filed under: Bitcoin - @ September 12, 2023 7:08 pm