The price of Solana (SOL) has experienced a significant decline of over 6% in the last 24 hours. This drop is mainly attributed to concerns that bankrupt cryptocurrency exchange FTX may liquidate a substantial amount of Solana tokens and other Solana-affiliated crypto assets. Such a sell-off could potentially flood the market with a large supply of SOL and related tokens.
Analyzing the data from Solscan, which has aggregated the value of the three publicly available FTX cold storage wallets, it is estimated that the FTX estate currently holds around $1.5 billion in crypto assets on the Solana network. Out of this amount, Solana tokens account for only $128 million, while the remaining portion consists of various Solana-based altcoins such as Wrapped Bitcoin (WBTC), Maps token (MAPS), Serum (SRM), and other tokens collectively referred to as “Sam coins,” a playful reference to the former FTX CEO Sam Bankman-Fried.
The perception that liquidators may soon unleash $128 million worth of SOL and hundreds of millions worth of other Solana-affiliated tokens into the market has created insecurity among investors. This sentiment is echoed on social media platforms, where users express concerns about the impending sell-off and speculate about the potential impact on SOL’s price. Some users predict a significant drop in SOL’s value, with one suggesting it could reach $14.
However, some individuals urge caution, highlighting that the bankruptcy plan actually imposes restrictions on the amount that can be sold at once. In FTX’s bankruptcy filings, the proposed plan for liquidating its assets involves appointing Galaxy Digital Capital Management, led by Mike Novogratz, as the investment manager responsible for overseeing the token sales. The plan sets a maximum weekly limit of $100 million for selling tokens, although this limit can be raised to $200 million on an individual token basis. These measures are designed to minimize the impact of the token sales on the overall market while still ensuring that FTX can repay its creditors.
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It’s important to note that the court has not yet approved the plan, but discussions on the plan and other matters related to FTX token sales are scheduled to take place before the Delaware Bankruptcy Court on September 13. This legal process will determine the feasibility and execution of the proposed plan.
In a hearing held on April 12, FTX revealed that it had recovered approximately $7.3 billion in liquid assets, with $4.8 billion of that amount being comprised of assets recovered as of November 2022. According to documents presented in the hearing, FTX had a total of $4.3 billion in crypto assets available for stakeholder recovery at market prices as of April 12.
As of now, Solana is trading at $18.38 per token, representing a decrease of nearly 11% for the week. The market remains uncertain about the potential impact of FTX’s asset liquidation on SOL’s price and the broader Solana ecosystem.
In conclusion, the price of Solana has dipped significantly amidst fears that FTX’s potential liquidation of Solana tokens and other assets may flood the market and cause a decline in SOL’s value. While concerns are prevalent among investors, the bankruptcy plan imposes limitations on the amount of tokens that can be sold, and discussions are ongoing in the legal process. The market awaits further developments to better assess the potential consequences of FTX’s asset liquidation on Solana and its affiliated tokens.
