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

Cryptocurrency

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 yet been signed off on by the courts, however, the plan and a number of other matters related to the FTX token sales are expected to come before the Delaware Bankruptcy Court on Sept. 13.

Related: FTX wallet shifts $10M in crypto, sparking fear of token dumps to come

In an April 12 hearing, FTX disclosed that it had recovered roughly $7.3 billion in liquid assets, with $4.8 billion of that sum being comprised of assets recovered as of November 2022.

Overall however, according to documents raised in the hearing, FTX held a total of $4.3 billion in crypto assets available for stakeholder recovery at market prices as of April 12.

FTX assets available for stakeholder recovery as of April 12. Source: Sullivan and Cromwell

At the time of publication, Solana is changing hands for $18.38 apiece, down nearly 11% for the week.

BitCulture: Fine art on Solana, AI music, podcast + book reviews

Articles You May Like

Chinese equities rise while rest of Asia falls amid tensions in Middle East
Philippines looks to generate $100bn of investment from trilateral summit
Musk predicts AI will overtake human intelligence next year
Inflation report sparks large UST selloff, munis outperform for now
Oil prices drop as traders shrug off fears of wider war in Middle East