A court approved FTX’s liquidation of $3.4 billion in various crypto assets, causing the market to crash. Galaxy Digital will manage the sale, which will be made in blocks of between $50 million and $100 million per week. The liquidation plan aims to avoid market and price instability despite the size of the holdings.
In a significant development for the cryptocurrency market, bankrupt exchange FTX received court approval to liquidate its crypto assets worth more than $3.4 billion. The decision, handed down by Judge John Dorsey, overturned the objections and allowed FTX to proceed with the sale, staking and hedging of its holdings.
Following this order, Galaxy Digital, under the leadership of Mike Novogratz, will oversee the sale following the dramatic fall and subsequent bankruptcy of FTX in November 2022. Discussions regarding the liquidation of FTX are predominantly influenced by traders concerned about an oversaturated market.
The exchange had made a presentation in August, arguing that such activities would mitigate downside risks and generate returns on dormant digital assets for the benefit of estates and creditors.
FTX Authorized to Liquidate Digital Asset Holdings
FTX crypto assets include several notable holdings, with $1.1 billion in SOL (Solana), $560 million in BTC (Bitcoin), $192 million in ETH (Ethereum), $137 million in APT, $119 million in dollars in XRP and 46 million dollars in STG. However, concerns have been raised within the crypto community regarding the potential implications on the prices of these cryptocurrencies as a result of the liquidation.
On this matter, renowned crypto expert Michael Van de Poppe suggests that the market impact of FTX’s approval to sell $3.4 billion in crypto assets, combined with Consumer Price Index (CPI) data worse than what is expected, is limited.
Market participants anticipate that FTX’s selling activities, including the weekly sale of up to $200 million in assets to applicable clients, may exert some additional selling pressure, although this is likely already factored into current prices.
From the market. In particular, an important aspect of FTX’s holdings is Solana, which comprises a substantial portion of the exchange’s assets. Van de Poppe highlights that most of SOL is up for grabs, so it is not available for sale. Only approximately 7 million SOLs can be sold, most of which have already been liquidated. This factor plays a critical role in shaping market expectations, as the forecast of a massive sell-off in Solana may not materialize due to the limited supply available for sale.
FTX’s court-approved liquidation of its crypto assets marks a significant development in the cryptocurrency landscape. The implications on market prices, investor sentiment, and the broader crypto community will be closely monitored as FTX navigates the process of selling, staking, and hedging its holdings.
Crypto Market Reaction to FTX News
Bitcoin saw a slight decline following the press release, falling 0.9%. Likewise, Ethereum fell 1%, while Solana suffered a 2.2% drop. However, previous news from earlier in the week had already taken much of this impact into account.
Currently, the company has assets exceeding $3.4 billion in digital format. It also has a venture investment portfolio valued at approximately $4.5 billion, complemented by $200 million in luxury real estate in the Bahamas and $529 million in securities.
By Audy Castaneda
