FTX, formerly a top-tier cryptocurrency exchange now facing bankruptcy, is seeking court approval for a colossal $3.4 billion crypto selloff scheduled for September 13. The mere announcement of this planned liquidation has already sent the market into a downturn, signaling potential bearish trends for Wednesday. Notably, FTX holds a substantial amount of Solana, among other cryptocurrencies, in its portfolio.
Will FTX’s Selloff Really Impact The Crypto Market?
Set for a court hearing on September 13, the bankrupt FTX exchange has submitted a motion detailing its strategy to liquidate its cryptocurrency assets into fiat currency. The aim is to settle debts with creditors. Initially filed on August 23, the motion has garnered significant attention from creditors and token holders, who are keenly awaiting the hearing’s outcome. The proceedings could potentially facilitate the recovery of up to $3.4 billion.
FTX’s legal filings indicate that the exchange plans to sell off no more than $100-$200 million in digital assets per week. This phased approach could result in a more gradual bearish impact on the market rather than causing a sudden plunge in asset prices if FTX were to liquidate its entire portfolio at once.
As of January 17, FTX’s holdings included $685 million in Solana (SOL), $42 million in Dogecoin (DOGE), and $268 million in BTC. The exchange also holds other assets in its portfolio.
Nonetheless, FTX’s planned weekly selloff in the millions is unlikely to exert immediate downward pressure on asset prices. Even if the court grants approval by September 13, the liquidation may not start immediately. Furthermore, a large portion of their Solana assets are tied up in vesting agreements and will remain unsellable for an extended period.
What’s Next For SOL Price?
Solana has been experiencing a gradual correction within the price range of $19.1 to $17.3. The bears have successfully capitalized on rallies, selling off when the price approaches the 20-day EMA, signaling that market sentiment remains bearish. As of writing, SOL price trades at $17.6, declining over 4% from yesterday’s rate.
The bulls’ continuous inability to push the price above the 20-day EMA indicates that the most likely direction for the asset is downward. If the bears manage to pull the price below the immediate support level of $17.1, the SOL price could potentially drop to $15.3.
However, the bulls are not without their strategies. They aim to drive the price above the 20-day EMA. If successful, the SOL price could target the next resistance level near $20. This is a crucial point for the bears to hold, as a breach above it could pave the way for a possible rally to $22.4.