The sale of tokens held by bankrupt crypto exchange FTX is unlikely to cause a significant market shock, Coinbase suggested in its research report.
Coinbase Doesn't Think FTX's Token Sales Will Affect the Market
According to Coinbase, several factors will moderate the impact of these sales.
First, token sales will be subject to volume limits, and liquidations will be limited to $50 million per week in the first phase.
This limit is planned to be increased to 100 million dollars in the coming weeks. Specifically, any permanent increase to a maximum of $200 million per week would require approval from committees representing FTX borrowers.
According to a recent court filing, FTX currently holds approximately $1.16 billion in Solana (SOL), $560 million in Bitcoin (BTC), $192 million in Ethereum (ETH), and $1.49 billion in various other tokens.
The court authorized the exchange to sell these assets and use them to repay creditors.
Additionally, the sale of certain “insider” tokens requires strict controls and 10 days notice to the relevant committees.
A significant portion of FTX's Solana holdings will remain locked until 2025 as part of the token's vesting program, along with some other tokens planned for sale.
Finally, FTX will have the option to hedge Bitcoin, Ethereum and other token sales through an investment advisor, pending committee approval.
These combined factors are expected to mitigate potential market declines that may result from FTX's token liquidation sales.
*This is not investment advice.