Earlier this week, the crypto market was rattled by a wave of bearish sentiment as the collapsed crypto exchange FTX took a pivotal step in its bankruptcy proceedings. FTX had sought the court’s approval to liquidate a staggering $3 billion in cryptocurrency holdings, predominantly comprising Solana (SOL) tokens.
Now, the judge overseeing the case has officially granted FTX the green light for this massive liquidation.
This development has sparked fresh concerns among crypto enthusiasts, who fear that such a substantial sell-off could exert downward pressure on the price of SOL, the native token of the Solana blockchain.
The once-popular crypto exchange FTX which imploded in November 2022, received permission from the US judge John Dorsey on September 13 to sell billions in crypto assets.
As a result, FTX will be able to raise fresh capital from the sales and begin paying back to affected creditors; however, a footnote on the court order emphasized that sales and redemptions of these assets will not count toward the $100 million weekly limit.
Calculation of this limitation will also disregard transactions conducted to bridge tokens from non-native blockchains back to their native networks.
According to a September 11 court filing, FTX currently owns $1.16 billion in SOL, making it by far its biggest crypto holding. Additionally, the embattled exchange also holds $560 million in BTC, $192 million in ETH, and $137 million in Aptos (APT).
Will this affect SOL’s price?
The reports that FTX got the nod to begin liquidating its crypto holdings led to fears among investors that its next steps could hurt the cryptocurrency prices, particularly Solana.
However, even though it owns over $1 billion in SOL, the liquidation is unlikely to make a significant impact on the token’s price.
This is primarily because FTX has only secured approval to sell those assets in batches, meaning a large portion of its SOL holdings will remain locked up and unavailable for sale for years.
Even though FTX holds roughly 15% of Solana’s entire circulating supply, the crypto exchange is allowed to sell just $100 million of all crypto per week.
Solana price analysis
At press time on September 15, SOL was changing hands at $18.91, up 0.22% in the past 24 hours.
The altcoin fell more than 3.5% on the week and over 23.6% in the past month, wiping about $1.7 billion off its market cap.
Solana displayed signs of recovery this week, but the price prediction algorithm on PricePredictions.com is not very bullish on its short-term price action. Notably, the platform predicted SOL to trade at $17.57 on September 30, implying a potential downside of 7%.
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