Solana’s value experiences a 6% decline due to concerns about a potential sell-off by FTX, though there are some nuances to consider. While the price of Solana (SOL) has dropped by over 6% in the last 24 hours, there is apprehension in the market regarding the bankrupt cryptocurrency exchange FTX liquidating a significant portion of its Solana-related assets. However, it appears unlikely that FTX will unload all of its holdings simultaneously.
According to information gathered from Solscan, which has tallied the contents of the three publicly accessible FTX cold storage wallets, the FTX estate holds a combined total of $1.5 billion in crypto assets on the Solana network. Among this substantial sum, Solana tokens represent only $128 million. The remaining amount consists of various Solana-based altcoins, including Wrapped Bitcoin (WBTC), Maps token (MAPS), Serum (SRM), and various other tokens humorously referred to as “Sam coins” in reference to the former FTX CEO Sam Bankman-Fried.
Nevertheless, the prospect of liquidators potentially releasing $128 million worth of SOL and hundreds of millions worth of other SOL-affiliated tokens into the market has instilled uncertainty among investors. Some users have expressed their concerns on social media, speculating about FTX’s impending sale: “FTX about to dump $680 million worth of SOL,” remarked one user, while another said, “SOL is going to drop significantly after FTX sells its holdings, possibly reaching $14 soon.”
Conversely, some have called for composure, highlighting that the bankruptcy plan imposes limitations on the amount that can be sold at any given time. According to FTX’s bankruptcy filings, the proposed liquidation plan for FTX’s assets includes specific conditions governing token sales. On August 24, FTX proposed appointing Galaxy Digital Capital Management, led by Mike Novogratz, as the investment manager responsible for overseeing the sale of recovered crypto assets.
Under this plan, the FTX estate would be permitted to sell a maximum of $100 million worth of its tokens each week, with the possibility of raising this limit to $200 million for individual tokens. These restrictions aim to minimize the impact of token sales on the broader market while still ensuring that FTX can satisfy its creditors.
It’s important to note that this plan has not yet received court approval, but it, along with various other matters related to FTX token sales, is scheduled for consideration by the Delaware Bankruptcy Court on September 13. In a hearing on April 12, FTX revealed that it had recovered approximately $7.3 billion in liquid assets, with $4.8 billion of that amount recovered as of November 2022. Overall, documents from the hearing indicated that FTX had $4.3 billion in crypto assets available for stakeholder recovery at market prices as of April 12.
At the time of writing, Solana is trading at $18.38 per token, marking an almost 11% decrease for the week.
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