Concern that FTX would liquidate $3.4 billion worth of crypto assets suddenly dominated the market. That’s why crypto markets fell on Monday. However, it is unclear whether this will continue. Some analysts say that this fear originating from FTX is a bit exaggerated.
Crypto market shaken by FTX sales concerns
As you follow on Kriptokoin.com, crypto investors started the week with concerns that the market would crash. In this, rumors that FTX would dispose of its $ 3.4 billion cryptocurrency assets were cultivated. But analysts say those concerns are likely overblown. “Actual selling pressure may be much smaller than initially anticipated,” says FalconX research manager David Lawant.
Cryptoasset markets fell sharply on Monday as traders feared that bankrupt crypto exchange FTX might start selling off its crypto stash, which includes $1.16 billion in Solana (SOL) and $560 million in Bitcoin (BTC). In this process, BTC fell below $ 25,000. Thus, it saw its lowest price since June. SOL, which FTX holds in large amounts, experienced a decrease of up to 8%.
David Lawant: Reaction to FTX sell-off is exaggerated!
Meanwhile, FTX may receive approval to sell assets at its next bankruptcy court hearing, scheduled for Wednesday. David Lawant points out that some of FTX’s crypto stash is venture investment with lock-ups preventing the sale of assets, and that there will also be limits on asset sales, mitigating the market impact. In this context, Lawant makes the following comment:
It’s possible that the reaction to potential FTX sell-offs has been exaggerated and the market will calm down from here.
Jeff Dorman: The market overreacted!
Jeff Dorman, chief investment officer of digital asset investment firm Arca, says market participants initially overreacted to the potential impact of the selloff. Dorman explains his views on this issue as follows:
The way crypto market makers and traders are pushing the FTX offering shows a complete misunderstanding of how the syndication sales process works. That’s not everyone unlocks a VC on their own. This is a court-ordered process that Galaxy will sell very slowly and opportunistically.
Meanwhile, the market has shown signs of recovery since the initial scare. BTC has retraced to $26,000, or roughly where it was before Monday’s sell-off.
More crypto selling pressure on the horizon?
The market impact of the FTX crypto sell-off is likely to be weaker than expected. However, there are other events that will increase the downward pressure on prices. Vetle Lunde, senior analyst at crypto analysis firm K33 Research, said in a report, “The market is also looking at Mt. “He expects further sell-side pressure from Gox trustees and US Silk Road Bitcoins,” he says.
US authorities are gradually selling off parts of the 50,000 BTC seized in connection with Silk Road. Mt. Gox, hackers stole approximately 850,000 Bitcoins years ago. Authorities managed to capture only part of it, however. Mt. Gox hack may recover their assets later this year. “We don’t know the schedule and structure of these potential sell-side flows,” Lunde said. “But all of them were decisive forces in mobilizing a sentiment that was already under pressure,” he says.
Latest amid FTX sell-off fears, Apecoin (APE) and Axie Infinity (AXS) are also facing massive token lockups, allowing early venture capital investors to sell in the coming weeks, crypto services provider Matrixport reported.
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