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- Rumors are that the bankrupt crypto exchange FTX is about to start selling many of its remaining crypto holdings on the market.
- According to a Reuters report, FTX holds approximately ~$7.3 billion in cash and various crypto assets, including Bitcoin, FTT, and Ether.
Is FTX About to Crash the Crypto Market?
Earlier this week, crypto investors endured a collective panic attack when hints suggested a potential large-scale selloff.
These rumors were fueled by reports of substantial movement of assets in wallets linked to the bankrupt crypto exchange, FTX.
Arkham Intelligence estimated that more than $10 million of digital assets were transferred from Solana to Ethereum on the 31st of August.
The speculation was that these shifts were the first in a line of massive sell-offs due to FTX’s bankruptcy.
However, FTX later clarified that they transferred these assets merely for consolidation. Still, the initial asset movement alarmed many investors.
The apprehension was amplified by the community, with posts claiming the assets connected to the transfer were worth $1.5B.
How Much Crypto Does FTX Have?
The mystery of how much crypto FTX holds in their cold wallets mainly fueled the widespread panic.
The most accurate picture of FTX’s assets is drawn from a Reuters report published in April. The company suggested that FTX had secured $7.3 billion in cash and crypto. The division between the two was unspecified.
That said, the potential liquidation of FTX’s assets might not shake the market as much as some X users suggest. The truth is that a big chunk of FTX’s assets are illiquid.
Examining the wallet addresses shows that many assets are inactive, non-liquid, low-value coins.
Even the wrapped Bitcoin (soBTC) and wrapped Ethereum (soETH) present in those wallets aren’t even closely aligned with the value of their actual counterparts, trading at steep discounts of $1,328 and $159.
The Liquditation Will Happen Slowly
Duration is another factor that can make FTX’s liquidation insignificant for the crypto market.
FTX debtors’ most recent proposal outlines a weekly crypto liquidation cap of $100 million, with the flexibility to raise the cap to $200 million for specific tokens. These constraints will mitigate the effects of the token sales.
That said, we should focus on the impact creditors feel, not the broader market.
It’s been almost a year since FTX filed for bankruptcy, and there doesn’t seem to be a conclusion to the whole story coming anytime soon.
With every day that passes, the assets that creditors can redeem shrink. But what are the real winners in this situation? The only winners in situations like these are the lawyers…