Solana
Solana price crash and FTX hearing: A complete rundown
- FTX exchange’s estate holds $1.5 billion in assets on the Solana chain, $128 million of which are SOL tokens.
- The exchange’s motion to convert its crypto holdings to fiat and pay back creditors is scheduled to be heard at court on Wednesday.
- FTX is unlikely to shed all its SOL token holdings at once as the bankruptcy plan imposes conditions on the sale of assets.
Solana price has crashed on several occasions in the past week as traders await a ruling on FTX exchange’s plan to convert its crypto assets to fiat. The court hearing of FTX’s August 23 motion is, therefore, key to the SOL community of holders.
SOL price dropped 8% over the weekend as traders feared a mass sell-off of the altcoin by FTX’s estate.
These catalysts likely triggered SOL price crashes in September
On September 10, Solana price declined nearly 6% as market participants feared a sell-off by FTX’s estate. Based on the data from Solscan, the value of all three publicly available FTX cold storage wallets is $1.5 billion on the Solana blockchain.
Of these cryptocurrencies, FTX holds $128 million worth of SOL tokens, and traders fear that an inflow of these altcoins to exchanges could usher in downside volatility, increasing the selling pressure on Solana price.
FTX’s bankruptcy plan, however, imposes certain conditions on the sale of assets, and it is highly unlikely that the exchange platform will shed all its SOL holdings at once.
The US bankruptcy court for the district of Delaware scheduled an Omnibus hearing on September 13. This hearing is key to the exchange’s plan to convert its crypto assets held on different blockchains, including Solana, to fiat for effective payback to creditors.
The purpose of such a pretrial hearing is typically to discuss the motion and rule on it. In this case, if FTX’s request is accepted, it could set in motion a series of events to liquidate FTX’s crypto holdings across blockchains.
FTX crypto liquidation, if approved, unlikely to usher in bloodbath
If the Omnibus hearing on September 13 approves FTX’s August 23 motion to shed crypto holdings for fiat, it is still unlikely to usher in a bloodbath in cryptocurrency prices. FTX’s bankruptcy plan does not allow for a single move to sell-off all assets at once, and it is quit likely to be performed in a staggered manner.
BlockFi, a crypto lending firm with $1.2 billion in exposure to Samuel Bankman Fried’s FTX exchange and Alameda trading firm, recently received the nod from bankruptcy court to begin withdrawals for digital assets. The approval was subject to restrictions for eligible accounts.
Market participants can expect a similar outcome for FTX exchange, in case the motion gets approved in the September 13 hearing.
At the time of writing, Solana price is $18.17 on Binance. The altcoin yielded 7.10% losses for holders over the past week.
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