“In the wake of November’s FTX market crash, cryptocurrency investors began to withdraw from Solana, causing billions of dollars’ worth of SOL Coins to accumulate. Consequently, the values of FTT and various other cryptocurrencies dwindled. With the looming $1 billion sell-off pressure and declining SOL Coin Total Value Locked (TVL) in less active markets, significant repercussions appear imminent. So, what lies ahead?”
Solana Coin SOL
“SOL Coin has been enduring a tumultuous journey for nearly a year following the FTX crash. After plummeting to $8, it experienced a resurgence into the double-digit range spurred by a late-night tweet from Vitalik Buterin, in which he claimed to have ‘escaped the fat cats.’ FTX and the hedge fund Alameda Research were closely tied to the renowned smart contract platform, earning them a spot in the ‘Sam Coins’ collective.
But why are we revisiting the past today? The catalyst is a recent court verdict. The colossal selling pressure on SOL Coin emerged following the Delaware Bankruptcy Court’s approval of FTX’s digital asset sale, encompassing 55.75 million SOL tokens valued at $1.062 billion. Judge John Dorsey rendered this decision during a hearing on September 13. In the aftermath of the court’s ruling, SOL’s price plummeted to a weekly low of $17.96.”
“Is a Decline in SOL Coin’s Price Imminent?”
“Last year, we conducted an in-depth analysis of the portfolios of FTX and Alameda, both of which faced bankruptcy in the past two months. We delved into the significant opportunities for SOL Coin, and while approval has been granted, the immediate sale of over $1 billion worth of SOL Coin by FTX remains unlikely. Crypto trader MartyParty recently commented that the concerns have been overstated, addressing the very issues we emphasized last year. The majority of SOL Coin locks are set to be released between 2025 and 2028.”
“According to the timetable, the locks on more than 33 million SOL tokens have yet to be released, constituting over 60% of FTX’s assets slated for market sale. As per the crypto-to-fiat conversion terms, FTX won’t need to surpass an upper limit of $50 million in the first week, and $100 million in the subsequent weeks without prior written approval from the creditors committee, interim committee, or court’s consent to raise the weekly limit to $200 million.
Assuming the entirety of SOL tokens can be sold, the liquidation of their complete assets would span approximately 10 to 12 weeks, thereby distributing the selling pressure over several weeks. When assessed on a weekly basis, the volume pressure exerted by FTX would amount to around 4%. MartyParty made this observation based on a comparison between the daily spot volume and the potential selling pressure of SOL.”
“Nonetheless, a concern lingers. MartyParty’s optimism might stem from his status as an SOL Coin investor, but the true impact of news and events on price is contingent on the prevailing market conditions. The crypto landscape can witness numerous significant developments over the course of 12 weeks, and SOL Coin’s response to these sales can fluctuate as these events unfold. Furthermore, it remains uncertain whether there will be consistent demand in response to each weekly net sale.
Presently, with purchases in the range of $7-8 million, we are generating bullish signals for major altcoins. The scale of the sale should be assessed in conjunction with the scarcity of market makers and any potential investor disinterest.”