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FTX's Token Dump Sparks Market Crash Concerns





Judge John Dorsey has granted approval for the collapsed cryptocurrency exchange FTX (FTT-USD) to proceed with the sale, staking, and hedging of its crypto holdings, which were valued at $3.4 billion as of the end of August. The decision was made during a court hearing on Wednesday.


FTX's plan for handling its cryptocurrency assets, primarily consisting of bitcoin (BTC-USD), ethereum (ETH-USD), and solana (SOL-USD), involves collaboration with Mike Novogratz's Galaxy Digital Holdings (OTCPK:BRPHF), as outlined in court documents from August.


Under this plan, FTX will limit its weekly token sales to a maximum of $200 million. It's worth noting that this amount is relatively small when compared to the broader cryptocurrency market, with bitcoin alone typically experiencing daily trading volumes ranging from $10 billion to $20 billion.


The primary goal of this move is to repay the exchange's creditors, and thus far, approximately $7 billion in liquid assets have been recovered.


Regarding the potential impact of FTX's liquidation on the crypto market, Greg Moritz, the co-founder and chief operating officer of Alt Tab Capital, commented that it is likely to be relatively minor and unfold over several months. However, he noted that there has already been downward pressure on various coins due to the proposal. Moritz attributed this to retail crypto market participants not fully comprehending FTX's plan and reacting based on fear rather than rational analysis. Such market reactions can create attractive buying opportunities for savvy investors with a long-term perspective.


Reference:

Editor, M.G., SA News (2023) FTX gets green light to sell $3.4B in bitcoin, ethereum, solana (Cryptocurrency:FTT-USD) | Seeking Alpha, seekingalpha.com. Available at: https://seekingalpha.com/news/4011527-ftx-gets-green-light-to-sell-34b-in-bitcoin-ethereum-solana (Accessed: 14 September 2023).



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