3.4 billion selling pressure? If FTX is approved to liquidate tokens, what impact will it have on the market?

Comprehensive editor: Felix, PANews

One of the things that the market is most concerned about this week is that FTX will conduct a court hearing on its token sale application on September 13. According to court documents filed by FTX on August 23, FTX hopes to start selling, pledging and hedging its large amounts. Cryptocurrency assets. FTX hopes to return funds to creditors in fiat currency rather than Bitcoin or Ethereum. As of April this year, FTX held $3.4 billion worth of cryptocurrencies, which would mean huge selling pressure if the trial passes. As a result, there has been widespread concern and FUD sentiment in the market since last week.

The matter has not yet been decided. On the one hand, the FTX token sale application will be heard by the Delaware Bankruptcy Court at 1 pm ET on September 13. Whether the court can pass it is still unknown. Even if FTX is approved on September 13, the liquidation may not start immediately and will be sold in batches week by week. Perhaps in preparation for the sale, FTX wallets have been transferring last week.

Altcoins affected

The possible sell-off of FTX has sparked concerns in the market, especially the altcoins owned by FTX. Solana is the largest portion of its assets, worth about $685 million, records show.

This uncertainty triggered panic among SOL investors. As of 12:00 on September 11 (Beijing time), the price of SOL fell 4.6% in the past 24 hours and is currently hovering around $18.36. This downturn is in stark contrast to most other coins, which have largely maintained their prices or fallen slightly.

Additionally, the exchange’s proprietary token, FTT, accounts for $529 million of assets to be liquidated. FTT's limited liquidity and market depth raise questions about FTX's clearing strategy.

FTX’s portfolio also includes a large number of other cryptocurrencies, such as Aptos, Dogecoin, Polygon’s MATIC, XRP, and more.

Market opinions vary

It may be premature to panic. In fact, FTX feared that the one-time sale would cause prices to plummet, eroding the value of its more than $3 billion in cryptocurrency holdings. Therefore, according to its filing, the selling limit is $100 million in tokens per week, with a maximum limit of $200 million per week.

In addition, industry insiders generally believe that the sale will not be through the exchange, but through OTC in a form that does not affect the market.

Crypto KOL MartyParty believes that FTX assets will not enter the open market and will not be traded through the exchange’s order book and will not affect the market. Cryptocurrency analyst Lark Davis also said that the tokens held by FTX will not be sold on the exchange, and most will be sold through OTC. The volumes for BTC and ETH are large, but selling pressure that the market can absorb. Aptos is probably the only one worth worrying about, but that would only trigger a big selloff if all Aptos sold off at once. But that won’t happen because FTX creditors want to extract maximum value from these tokens.

But the market is still worried about the possible adverse effects. Crypto analysis agency IntoTheBlock highlighted that bullish news for ETH and SOL appears to be overshadowed by fear-driven market dynamics. Although there is positive news in the market with Visa (Visa is extending its stablecoin settlement capabilities to the Solana blockchain and working with merchant acquirers Worldpay and Nuvei) and the possible approval of an Ethereum spot ETF, FTX’s upcoming 34 Billion dollar liquidations could determine market trends.

FTX is accelerating recovery measures

Recently, in addition to selling tokens, FTX has continued to seek ways to recover assets amid financial difficulties and has adopted a series of legal measures.

On September 10, FTX filed a recovery lawsuit against the full-chain interoperability platform LayerZero, hoping to recover US$21 million. In addition, legal proceedings were filed against LayerZero COO Ari Litan, demanding a payment of US$13 million, and US$6.5 million was sought from Litan's Skip & Goose company.

Additionally, FTX is reconsidering clawing back promotional fees paid to sports personalities. A court filing filed in bankruptcy court by FTX's current management on September 11 revealed a detailed list of celebrities, businesses and sports teams that have promoted the exchange over the years. Among them, FTX paid nearly $750,000 to former NBA star Shaquille O'Neal, approximately $308,000 to Naomi Osaka, nearly $206,000 to American football player Rafer Lawrence, and nearly $206,000 to baseball star David ·Ortiz paid approximately $271,000.

FTX acknowledges that the list itself may not reflect an exhaustive list of all deposits and repayments, but is working to identify all outstanding payments from previous years to understand how much of these can be recovered to repay the debt. It's unclear if all of the money is recoverable or if any athletes or teams have offered to have their money returned.