The bankruptcy of cryptocurrency exchange FTX, which held crypto assets worth more than $3.4 billion, has been approved by the court, marking a major event for the industry. Judge John Dorsey’s ruling allowed FTX to go through with its plans to sell, stake, and hedge its assets.
In a document made in August, the exchange argued that these sorts of actions would protect the estates and creditors from potential losses while also yielding rewards on dormant digital assets.
FTX’s crypto assets include the prominent SOL (Solana) ($1.1 billion), BTC ($560 million), ETH ($192 million), APT ($137 million), XRP ($119 million), and STG ($46 million) cryptocurrencies.
However, worries have been raised in the crypto community about the effects the liquidation might have on the pricing of these cryptocurrencies.
Not even the combination of FTX’s clearance to sell $3.4 billion in crypto assets and worse-than-anticipated Consumer Price Index (CPI) data is likely to have much of an effect on the market, according to respected crypto specialist Michael Van de Poppe.
FTX’s selling actions, including the sale of up to $200 million in assets for corresponding customers each week, are expected to contribute to the selling pressure in the market, although this is likely already reflected in current prices.
Particularly noteworthy is the fact that Solana represents a sizable chunk of FTX’s total assets. Van de Poppe stresses that much SOL is staked, making it unmarketable.
The bulk of the nearly 7 million SOL available for sale have already been liquidated. As the limited supply of Solana means that the market’s prediction of a large sell-off may not materialize, this element plays a crucial role in influencing market expectations.
Liabilities will be paid off by the sale of FTX’s assets over time, as determined by Van de Poppe’s study of the company’s authorized liquidation plan. As the recent sell-off of Solana has shown, this tactic may have some short-term effects on the market.
The crypto industry has seen a major shift with the court-approved liquidation of FTX’s crypto assets. As FTX works through the steps of selling, staking, and hedging its holdings, the effects on market pricing, investor sentiment, and the larger crypto community will be keenly followed.
The current price of SOL, as of this writing, is $18.11, reflecting a 1.6% increase over the last 24 hours. The recent news about FTX’s cryptocurrency holdings and the court’s approval of the exchange’s liquidation plans led many to believe that the price of cryptocurrencies would drop significantly.
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