Thursday, 21 September 2023

Crypto News

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

Solana falls 6% amid fears of FTX dump — but there's a catch

The price of Solana (SOL) has plunged more than 6% the last 24 hours, amid fears that bankrupt crypto exchange FTX may soon liquidate its significant portions of the token and other Solana-affiliated crypto assets. 

The price of Solana has fallen 6% to $18.38 in the last 24 hours. Source: CoinGecko

According to a combination of data from Solscan, which has added up the value of the three publicly available FTX cold storage wallets, the FTX estate holds a combined $1.5 billion in crypto assets on the Solana network.

Of that weighty figure, Solana tokens account for just $128 million.

The rest of the amount is comprised of numerous Solana-based altcoins such as Wrapped Bitcoin (WBTC), Maps token (MAPS), Serum (SRM) and a number of other tokens colloquially referred to as “Sam coins” — a jest at the former FTX CEO Sam Bankman-Fried.

The total sum of Solana-based tokens on FTX Cold Storage #1 wallet. Source: Solscan

Still, the idea that liquidators may soon unleash $128 million worth of SOL and hundreds of millions worth of other SOL-affiliated tokens onto the market hasn’t inspired much confidence in the market.

A number of users took to X (formerly known as Twitter) to voice their concerns over the impending sell-off. “FTX about to dump $680 mil worth of SOL 👀” wrote one user. “SOL is going to dump hard after FTX sells its bag, going to reach 14$ soon,” said another.

Others have instead urged calm, as the bankruptcy plan actually restricts how much can be sold off at once

According to FTX bankruptcy filings, the proposed plan for the liquidation of FTX’s assets imposes a series of conditions on the sale of tokens.

On Aug. 24, FTX proposed to appoint Mike Novogratz’s Galaxy Digital Capital Management as the investment manager that would oversee the sales of its recovered crypto holdings.

In this plan, the FTX estate would only be permitted to sell a maximum of $100 million worth of its tokens each week, however, that limit could be raised to $200 million on an individual token basis.

These limits have been introduced in a bid to minimize the impact of token sales on the broader market while still allowing for FTX to make creditors whole.

Notably, the plan has not…

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