Analytics firm IntoTheBlock warns that a bankrupt crypto company holding billions of dollars in digital assets could lead to price cascading.
In a report Lucas Outumuro from IntotheBlock say that traders are selling their holdings out of fear that the now-defunct crypto exchange FTX could liquidate their massive digital assets worth $3 billion.
Outumuro focuses on Ethereum (ETH) and its rival Solana (SOL), two crypto assets that make up a significant portion of FTX’s assets.
“A key factor behind the discretionary sale is likely FTX’s impending liquidation of a reported $3 billion in crypto holdings.
While FTX has not reported when they will conduct these liquidations, it is likely that the market has become spooked following their recent bridging activity.
Since ETH and SOL are both part of FTX’s holdings, it is likely that the lack of sustained price action in these assets is related to sellers leading the way in FTX and [fewer] buyers looking to buy ahead in anticipation of their liquidation.”
For now, Outumuro says supply and demand appear to be clashing within a narrow trading range. However, the analyst mentions two other major vendors that could enter the crypto markets before the end of the year.
“It appears that the buying activity, driven by catalysts such as a potential ETH spot ETF, is being offset by the expectation of FTX selling. This complex dynamic may continue as other waves of major sellers are expected later this year (as the US government and Mount Gox claim), while institutional catalysts and organic adoption continue to improve.”
At the time of writing, Ethereum is trading at $1,612, while SOL is worth $18.34.
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