Why the crypto market should brace for another downward pressure
- FTX’s plan was subject to court approval which might happen on 13 September.
- SOL could be one of the biggest victims in the event of a sell-off.
The crypto market has been abuzz with optimism ever since Ethereum’s [ETH] ETF filings submitted by Ark Investment and 21 Shares. The bullish development, which also pushed Grayscale Ethereum Trust (ETHE) to its yearly highs, fueled expectations of additional investment and liquidity in a market that has been relatively quiet in recent months.
However, an impending bearish occurrence threatened to dampen market participants’ enthusiasm.
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Will FTX flood the market with cryptos?
According to a DeFi analyst, tainted cryptocurrency exchange FTX [FTT] could start liquidating its recovered crypto assets in the coming week, exerting significant downward pressure on the market.
Big selling pressure is potentially coming next week🚨
FTX will likely get approval to liquidate its assets on Sept. 13.
FTX had $3.4B in crypto in April. The proposed plan is to sell assets worth up to $200M per week. pic.twitter.com/4aHnhOVKP1
— The DeFi Investor 🔎 (@TheDeFinvestor) September 9, 2023
The proposed plan was subject to the approval of the Delaware Bankruptcy Court which was expected to review the case on 13 September. If the court grants permission, it would trigger a sell-off cycle at the rate of up to $200 million each week.
As per a hearing held on 12 April, the bankrupt trading platform held assets worth $4.3 billion in cryptos available for stakeholder recovery at the then market prices. Overall, the exchange managed to recover assets worth more than $7 billion in liquid cash, cryptos, and securities, since going bust in the fall of 2022.
SOL to suffer?
While latest data on the makeup of the recovered holdings was not available, a January disclosure suggested that the majority of them could be held in Solana [SOL]. The DeFi analyst predicted that SOL might experience greater sell-off pressure in the days to come.
Realistic or not, here’s SOL’s market cap in BTC terms
The development could disappoint SOL fan base who have been celebrating a series of positive stories lately, the most notable of which being a high-stakes deal with payments giant Visa. In fact, SOL plunged 5.84% in the last 24 hours, data from CoinMarketCap revealed.
Solana has been closely connected to FTX’s fortunes and the downfall of the exchange caused serious ramifications for the former.