FTX bankruptcy estate holdings -- DefiSquared

FTX received court approval to liquidate crypto assets two weeks ago. Since then there’s been a lot of bearish sentiment and rumors floating around how low prices will go, the amount of supply to be distributed, etc.

FTX court approval to liquidate crypto assets

DefiSquared dives into the FTX bankruptcy estate’s holdings and reasons through what this means (original tweet). Here are my takeaways:

• FTX going to sell $1.2B SOL at once is false

  • There is only 17-22M ($400M) unlocked (4% of supply)

  • 40-44M ($860M) is staked and vesting resulting in 1.7M ($34M) per month of unlocks

• How much impact does selling 4% of supply have?

• Use FXS as an example -- 1% of supply was sold by a16z over the course of a month

  • Resulted in 25-30% drawdown on FXS price

• So why is SOL +20% since the FTX selling court approval?

• DefiSquared thinks crypto markets don't price supply distribution well

  • E.g. In July ‘23, US government moved 10K BTC, BTC was still getting bid before the inevitable selling started

• As of recently, it’s clear that some big players are bidding spot SOL (Coinbase flows)

• So why hasn't FTX estate selling started?

  • Galaxy (firm in charge of selling) could be looking for OTC

  • Could be waiting for FTX creditor claims to finalize

  • Could also be waiting on the BTC Spot ETF approval pump to sell into -- Novogratz had publicly stated there would be good news in October

    • This makes shorting hard since Galaxy may not want to sell until the price has pumped enough which also pushes shorts to close

  • Could be long process to get private keys

• Estimates sales start next week earliest - end of October latest