The liquidation of collapsed crypto exchange FTX will not affect the crypto market significantly as the asset sales are bound by a weekly limit of $50 million, Coinbase said in its weekly market report.
Coinbase highlighted that the market showed a recovery after the FTX liquidation news brought in selling pressure. Investors ‘implicitly recognized’ that the court order to sell FTX assets has several limits and mitigating factors that substantially reduced the risk of a market shock.
The report highlights that the FTX exchange holds around $1.6 billion in SOL, $560 million in BTC, $192 million in ETH, and other assets totaling $1.49 billion, all totaling $3.4 billion.
On September 13, the US bankruptcy court in Delaware approved the liquidation of FTX’s estate. While the liquidation process includes limits on weekly sales, “these tokens will flood the market.”
The company can only sell $50 million of assets per week in the initial phase, which will be increased to $100 million in subsequent weeks. However, committees representing FTX debaters seek to increase the selling limit to $200 million per week.
Another major factor is the strict control over the sale of insider-affiliated tokens, which requires 10 days advance notice to the debate committees. Furthermore, a major part of FTX’s largest holding token (SOL) is locked until 2025 due to its vesting schedule, which cannot be sold until unlocked.
In addition, FTX will be able to use the market’s biggest assets, BTC and ETH, to hedge prior to the committee’s confirmation. The company will do so through an investment advisor.
Also Read: SBF’s Voir Dire Questions Are ‘Unnecessarily Intrusive’: DoJ
