Why FTX’s $3.4 Billion Asset Sale Isn’t A Matter of Worry?

Volatility in the broader cryptocurrency market has shot up once again with the news of FTX’s upcoming $3.4 billion sale of its crypto holdings. This has put, FTX’s major holdings of Solana (SOL), Ethereum (ETH), and Bitcoin (BTC) under major selling pressure.

FTX administrators have managed to retrieve approximately $7 billion in assets, of which $3.4 billion is in cryptocurrencies. A court hearing scheduled for Wednesday will review a proposal to initiate token sales as part of the creditor repayment plan, as per recent filings.

A presentation highlights that FTX possesses close to $1.2 billion in SOL, Solana’s native token. The asset inventory further includes $560 million in Bitcoin, the largest cryptocurrency, and $192 million in Ether, the second-largest cryptocurrency.

FTX will be reportedly appointing Mike Novogratz’s Galaxy Digital Holdings to handle the liquidation of its giant pile of tokens.

FUD Around FTX Creditor Liquidation

The broader cryptocurrency market remains largely apprehensive of the upcoming FTX creditor liquidation. However, it seems that the market is overreacting since FTX won’t be able to liquidate all of its $3.4 billion in one shot. As per the August filing, the crypto exchange can liquidate crypto from $50 million to a possible $200 million.

Thus, there’s a major misconception that all of FTX’s crypto holdings are open for liquidation or primed for market dump. The reality is that all these tokens shall undergo a linear monthly unlock until January 2028.

Additionally, certain portions of the SOL holdings, like the 7.5 million SOL obtained from Solana Labs by Alameda Research, are set to become accessible on March 1, 2025. Another tranche consisting of 61,853 SOL is scheduled to unlock on May 17, 2025.

Another reason that the market sentiment is largely negative is Bitcoin is failing to hold crucial support zones and is showing major weakness. As recently reported, Bitcoin has formed the death cross on the technical chart. This means that its 50-day short-term moving average has breached its 200-day short-term moving average. Thus, the BTC price could see further turbulence going ahead.

The month of September has been typically bearish for the crypto market. Probably, a relief rally could be starting next month onwards.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.