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Crypto Markets Face Turbulence as FTX Exchange Set to Liquidate $3.4bn Token Inventory

Published September 21, 2023
9 months ago

A noticeable surge in volatility is sweeping through the digital asset markets as traders mull over the implications of a potential liquidation of crypto assets tied to the now-invalid FTX exchange. This move is part of the bankruptcy process outlined by the administrators of FTX, who have thus far recovered around $7 billion in assets. This recovery includes a massive hoard of $3.4 billion in cryptocurrencies. In a bid to mitigate the owed debts to the creditors, a court hearing scheduled for Wednesday will examine a potential plan for the sale of these tokens, as revealed in recent filings.

Reports from various sources specify that the defunct FTX exchange holds approximately $1.2 billion in SOL, Solana network's native token. Other significant assets include Bitcoin ($560 million), the top-ranking crypto asset, and Ether ($192 million), seated at the second position in the market. A marker of the leading 100 tokens plummeted roughly 3% on Monday before bouncing back on Tuesday with a similar percentage rise. Bitcoin mimicked this pattern and was valued at approximately $25,870 around 12:32 p.m. Singapore time.

As a part of the plan, FTX is nominating the asset management subunit of billionaire Michael Novogratz's Galaxy Digital Holdings. This team's task would be to aid in managing the fallen exchange's vast cache of tokens. According to an August filing, the weekly cap for crypto liquidations could range anywhere from $50 million to a possible $200 million. Markus Thielen, the head of research at Matrixport, expressed concern about the market being "apprehensive about the upcoming FTX creditor liquidation".

Overall, September is not a particularly favorable month for digital assets. According to Bloomberg data, Bitcoin has experienced an average monthly drop of 6.2% over the past decade. Applying analysis through point and figure study – a method involving the tracking of sessions with token fluctuations of at least 1% – reveals that the $24,500 support level for Bitcoin is under threat. Consequently, if this is broken, the token could plummet to a value of $24,000 or even lower to $21,400.

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