Solana falls 6% amid fears of FTX dump — But there’s a catch

The cost of Solana (SOL) has actually plunged more than 6% in the last 24 hours amidst worries that insolvent crypto exchange FTX may quickly liquidate significant parts of the token and other Solana-affiliated crypto assets.The price of Solana has actually fallen 6% to $18.38 in the last 24 hours. Source: CoinGeckoAccording to a mix of information from Solscan, which has actually included up the worth of the three publicly readily available FTX cold storage wallets, the FTX estate holds a combined $1.5 billion in crypto possessions on the Solana network. Of that weighty figure, Solana tokens account for simply $128 million.The rest of the quantity includes various Solana-based altcoins, such as Wrapped Bitcoin (wBTC), Maps token (MAPS), Serum (SRM) and a number of other tokens informally described as “Sam coins”– a jest at the former FTX CEO Sam Bankman-Fried. The total amount of Solana-based tokens on FTX Cold Storage # 1 wallet. Source: SolscanStill, the concept that liquidators might quickly release $128 million worth of SOL and hundreds of millions worth of other SOL-affiliated tokens onto the market hasnt motivated much self-confidence in the market.A variety of users took to X (previously understood as Twitter) to voice their concerns over the approaching sell-off. “FTX about to dispose $680 mil worth of SOL,” wrote one user. “SOL is going to dump hard after FTX sells its bag, going to reach 14$ soon,” stated another. Others have instead advised calm, as the personal bankruptcy plan really restricts just how much can be offered off at once.According to FTX bankruptcy filings, the proposed prepare for the liquidation of FTXs properties imposes a series of conditions on the sale of tokens.On Aug. 24, FTX proposed to designate Mike Novogratzs Galaxy Digital Capital Management as the financial investment supervisor that would oversee the sales of its recuperated crypto holdings.In this plan, the FTX estate would just be permitted to offer a maximum of $100 million worth of its tokens each week; nevertheless, that limit might be raised to $200 million on a private token basis. These limitations have actually been introduced in a bid to lessen the impact of token sales on the broader market while still permitting FTX to make creditors whole.The FTX collapse and subsequently most significant black swan Solana ever sustained put SOL at $8And were fretted about ~$ 600M that will be offered throughout the next 5 years?Some Major L1s have greater inflation than this and no one cares.– Gumshoe (@ 0xGumshoe) September 10, 2023

Significantly, the plan has not yet been signed off on by the courts; nevertheless, the strategy and a number of other matters related to the FTX token sales are expected to come prior to the Delaware Bankruptcy Court on Sept. 13. In general, however, according to files raised in the hearing, FTX held an overall of $4.3 billion in crypto properties available for stakeholder recovery at market costs as of April 12.

Other Questions People Ask

What caused Solana to fall 6% amid fears of an FTX dump?

Solana's price dropped over 6% due to concerns that the insolvent crypto exchange FTX might liquidate a significant portion of its holdings in Solana and other affiliated tokens. The FTX estate reportedly holds around $1.5 billion in crypto assets on the Solana network, with $128 million in SOL tokens. This potential sell-off has created anxiety among investors, leading to a decrease in market confidence.

How much Solana does FTX hold that could impact the market?

FTX holds approximately $128 million worth of Solana tokens as part of its total $1.5 billion in crypto assets on the Solana network. The fear is that if FTX liquidates these holdings, it could flood the market with SOL, further driving down its price. However, the proposed liquidation plan limits the amount that can be sold weekly, which may mitigate some of the potential market impact.

What restrictions are in place for FTX's liquidation of Solana tokens?

The proposed liquidation plan for FTX restricts the sale of its tokens to a maximum of $100 million per week, with the possibility of increasing this limit to $200 million for individual tokens. This strategy aims to minimize the adverse effects on the market while allowing FTX to recover funds for creditors. The plan is still pending court approval, which adds another layer of uncertainty to the situation.

What are investors saying about the potential FTX dump of Solana?

Investors have expressed significant concern over the potential dump of Solana by FTX, with many taking to social media to voice their fears. Comments range from predictions of a steep price drop to calls for calm, highlighting the divided sentiment in the market. While some anticipate a hard sell-off, others point out that the bankruptcy plan's restrictions may prevent a drastic impact on SOL's price.

When will the court decide on FTX's liquidation plan affecting Solana?

The court is expected to review FTX's liquidation plan, including the sale of Solana tokens, during a hearing on September 13. This decision will be crucial in determining how and when FTX can proceed with selling its crypto assets. Investors are closely watching this development, as it could significantly influence Solana's market dynamics and price stability.