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Recent market jitters have been triggered by concerns that the distressed crypto exchange FTX might offload large volumes of Solana (SOL) and its associated assets. In the last day alone, Solana's value dipped by more than 6%.
Analytical insights provided by Solscan have illuminated the extent of FTX's holdings on the Solana network. The available data indicates FTX's holdings stand at around $1.5 billion in crypto assets. Surprisingly, Solana tokens only represent about $128 million of this stash. The dominant share of FTX's Solana holdings is spread across various other Solana-based cryptocurrencies. Noteworthy among these are Wrapped Bitcoin (WBTC), Maps token (MAPS), and Serum (SRM), plus several others often jokingly named after former FTX CEO, Sam Bankman-Fried.
Despite the reassurance that Solana tokens form a small portion of FTX’s portfolio, market sentiment remains wary. Several social media users on X (previously Twitter) have expressed fears of an impending market downturn due to FTX liquidating its assets. Some speculate a severe price drop for Solana.
On the brighter side, there are restrictions regarding how quickly FTX can liquidate its assets. As per FTX's bankruptcy documents, there are clear guidelines on how the assets can be sold. FTX had earlier proposed teaming up with Galaxy Digital Capital Management, headed by Mike Novogratz, to manage the liquidation of their crypto holdings. This would involve controlled sales, allowing FTX to only sell up to $100 million worth of its tokens in a week. There's flexibility to stretch this to $200 million for specific tokens, but the overarching goal is to protect the larger market from sudden shocks.
While this proposal sounds promising, it hasn't been officially approved. The Delaware Bankruptcy Court is expected to review this plan, along with other related topics, on September 13. For context, during a hearing in April, FTX revealed they had managed to regain about $7.3 billion in liquid assets. As of April, $4.3 billion in crypto assets were set aside for stakeholders to recover at market rates.
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