Analytics firm IntoTheBlock is warning that one bankrupt crypto firm holding billions of dollars in digital assets could trigger cascading prices.
In a report, IntotheBlock’s Lucas Outumuro says that traders are selling their holdings out of fear that the now-defunct crypto exchange FTX could liquidate their massive digital asset trove worth $3 billion.
“A key factor behind the discretionary selling is likely to be FTX’s upcoming liquidation of reportedly $3 billion in crypto holdings.
Though FTX has not reported when they will conduct these liquidations, it is likely that the market got spooked following their recent bridging activity.
With ETH and SOL both being part of FTX’s holdings, it is plausible to believe that the lack of sustained price action in these assets is linked to sellers front-running FTX and [fewer] buyers looking to buy ahead in anticipation of their liquidation.”
For now, Outumuro says that demand and supply appear to be clashing within a narrow trading range. However, the analyst names two other large sellers that could enter the crypto markets before the year expires.
“It appears that buying activity driven by catalysts such as a potential ETH spot ETF is being offset by the anticipation of FTX selling. These complex dynamics may persist as there are other waves of large sellers (such as the US government and Mt. Gox claims) expected later this year at the same time that institutional catalysts and organic adoption continue to improve.”
At time of writing, Ethereum is trading for $1,612 while SOL is worth $18.34.
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