Despite some traders’ fears, the impending liquidations of bankrupt cryptocurrency exchange FTX are unlikely to flood the market, Coinbase’s head of institutional research said.
David Duong recently noted this analysis that FTX’s crypto liquidations will be governed by weekly selling limits of $50 million per week for the initial phase and $100 million per week in subsequent weeks.
Court documents show that as of August 31, FTX held approximately $1.162 billion worth of Solana (SOL), $560 million worth of Bitcoin (BTC), $192 million worth of Ethereum (ETH), and $1.49 billion worth of various other digital assets.
Duong says there are “strict controls on the sale of certain ‘insider-affiliated’ tokens, which require 10 days’ prior notice to the same committees.”
The Coinbase researcher also notes that the vesting schedule of FTX’s Solana holdings will lock up a large portion of the bankrupt exchange’s SOL until 2025. Additionally, he says FTX will be able to hedge its crypto sales through an investment advisor if it receives prior approval from the commission. .
At the macro level, Duong still expects the US Federal Reserve to ease monetary policy in the first or second quarter of 2024, even if it chooses to raise rates again later this year.
“As we said in our August Monthly Outlook, we believe that expansionary fiscal policy will keep the US economy supernaturally strong for now. But among the apparently healthy top indicators, labor markets have peaked, credit standards have tightened, delinquencies are rising and student loan payments are set to restart in October. We think that a dual expansionary fiscal and monetary regime should be especially supportive of Bitcoin as an alternative to the traditional financial system.”
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