• FTX exchange’s estate holds $1.5 billion in assets on the Solana chain, $128 million of which are SOL tokens. 
  • The exchange’s motion to convert its crypto holdings to fiat and pay back creditors is scheduled to be heard at court on Wednesday. 
  • FTX is unlikely to shed all its SOL token holdings at once as the bankruptcy plan imposes conditions on the sale of assets.

Solana price has crashed on several occasions in the past week as traders await a ruling on FTX exchange’s plan to convert its crypto assets to fiat. The court hearing of FTX’s August 23 motion is, therefore, key to the SOL community of holders.

SOL price dropped 8% over the weekend as traders feared a mass sell-off of the altcoin by FTX’s estate. 

Also read: Altcoin prices dropped over the weekend, liquidating more than $50 million in long positions overnight

These catalysts likely triggered SOL price crashes in September

On September 10, Solana price declined nearly 6% as market participants feared a sell-off by FTX’s estate. Based on the data from Solscan, the value of all three publicly available FTX cold storage wallets is $1.5 billion on the Solana blockchain.

Of these cryptocurrencies, FTX holds $128 million worth of SOL tokens, and traders fear that an inflow of these altcoins to exchanges could usher in downside volatility, increasing the selling pressure on Solana price.

FTX’s bankruptcy plan, however, imposes certain conditions on the sale of assets, and it is highly unlikely that the exchange platform will shed all its SOL holdings at once.

The US bankruptcy court for the district of Delaware scheduled an Omnibus hearing on September 13. This hearing is key to the exchange’s plan to convert its crypto assets held on different blockchains, including Solana, to fiat for effective payback to creditors.

The purpose of such a pretrial hearing is typically to discuss the motion and rule on it. In this case, if FTX’s request is accepted, it could set in motion a series of events to liquidate FTX’s crypto holdings across blockchains. 

FTX crypto liquidation, if approved, unlikely to usher in bloodbath

If the Omnibus hearing on September 13 approves FTX’s August 23 motion to shed crypto holdings for fiat, it is still unlikely to usher in a bloodbath in cryptocurrency prices. FTX’s bankruptcy plan does not allow for a single move to sell-off all assets at once, and it is quit likely to be performed in a staggered manner.

BlockFi, a crypto lending firm with $1.2 billion in exposure to Samuel Bankman Fried’s FTX exchange and Alameda trading firm, recently received the nod from bankruptcy court to begin withdrawals for digital assets. The approval was subject to restrictions for eligible accounts. 

Market participants can expect a similar outcome for FTX exchange, in case the motion gets approved in the September 13 hearing.

At the time of writing, Solana price is $18.17 on Binance. The altcoin yielded 7.10% losses for holders over the past week.

Bitcoin, altcoins, stablecoins FAQs

What is Bitcoin?

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

What are altcoins?

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

What are stablecoins?

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

What is Bitcoin Dominance?

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.

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