Fear of FTX liquidations mount: Which cryptos are most at risk?

• FTX’s BTC and ETH holdings were only marginal compared to their weekly trading volumes.
• Solana had a trick up its sleeve, while DOGE and TRX’s state was concerning. 

FTX [FTT], the crypto exchange that caused havoc in the industry a few months ago, has once again made it to the headlines. This happened as several expected the exchange to liquidate its holdings, which could have a larger impact on the market. 

Is your portfolio green? Check out the BTC Profit Calculator        

FTX’s portfolio consists of multiple top assets, and if the exchange liquidates, the crypto market can witness a southward movement in the coming days. Among FTX’s holdings, Dogecoin [DOGE] and Tron [TRX] were the most vulnerable, as per the latest data. 

Decoding FTX’s holdings

Messari recently posted a tweet highlighting FTX’s largest holdings, which included several cryptos with large market capitalizations. The tweet also highlighted the value of different cryptos that the exchange held.

The relevant figure wasn’t the absolute value of the tokens held, but rather their amount relative to each asset’s actively traded volume. FTX has a total of more than $3 billion in crypto assets, and as per the proposed plan, FTX will liquidate over $200 million every week, beginning from 13 September. 

Not all cryptos have concerns

Though the liquidation has the potential to increase downward pressure, not all assets have reasons for concern. FTX’s Bitcoin [BTC] holdings, worth $353 million, were only 1% of BTC’s weekly traded volume.

Since the exchange’s holding only accounts for a fraction of the king of cryptos’ weekly trade volume, its liquidation might not affect BTC to a higher degree. 

The same was true with Ethereum [ETH] and Ripple [XRP], as FTX’s holding accounted for nearly 1% of both tokens’ weekly trade volume, meaning the market can absorb much of the selling.

While the aforementioned assets were behind a firewall, several other cryptos were directly exposed to the threat. 

As reported earlier, Solana [SOL] might experience greater sell-off pressure in the days to come. FTX’s holding translates to more than 80% of SOL’s weekly volume. Therefore, a massive hike in selling pressure seemed inevitable, which could push the token’s price down.

However, Solana has a trick up its sleeve, which can save it from a bloodbath. 

SOL held by the exchange consists largely of vesting tokens that are not immediately liquid in open markets. Therefore, only SOL worth $9.2 million will be unlocked per month.

This significantly reduces the impact of the liquidation and brings it closer to the manageability of ETH and BTC liquidations. 

DOGE and TRX are under threat

While Solana had a trump card, not every crypto was blessed with the same. Messari’s tweet mentioned that DOGE and TRX are two of the coins that might face trouble post-liquidation.

Both coins are less liquid compared to the rest, as FTX holdings represent 6–12% of weekly volumes and can have a much higher impact on the market.

As of now, TRX has managed to paint its weekly chart green as its price increased by more than 1%. At press time, it was trading at $0.07867.

DOGE, on the other hand, was already bearish as its value declined by over 4% in the last seven days. At the time of writing, it was trading at $0.06096 with a market capitalization of over $8.5 billion.

It was interesting to note that both coins had high trading volumes throughout the last week. A disparity was seen in their funding rates, as TRX’s metric was green, reflecting its demand in the derivatives market, while DOGE’s funding rate was red. 

Source: Santiment

Do DOGE and TRX have more problems to address?

The chances of both cryptos witnessing a downtrend after the liquidation seemed likely. However, a look at their daily charts helped understand whether there were other concerns apart from FTX’s action.

TRX’s daily chat revealed quite a few bearish market indicators. For instance, the Money Flow Index (MFI) registered a downtick, as did the Chaikin Money Flow (CMF). Its MACD also displayed the possibility of a bearish crossover.

However, the RSI supported the buyers as it went up from the neutral mark. 

Source: TradingView

Read Dogecoin’s [DOGE] Price Prediction 2023-24

Like Tron, Dogecoin’s market indicators also looked bearish. Its MACD already displayed a bearish crossover. Moreover, its CMF and On Balance Volume (OBV) moved sideways, while its MFI registered a decline.

Therefore, considering all the market indicators along with FTX’s possible liquidation, both TRX and DOGE might witness drops in their prices over the days to follow. 

Source: TradingView