FTX Crypto Holdings Unlikely to Flood Markets, Says Coinbase
FTX liquidation not expected to flood crypto market according to Coinbase research head. The upcoming liquidation of bankrupt cryptocurrency exchange FTX will likely be handled in an orderly manner that prevents sudden sell-off of assets, reducing impact on overall crypto market.
Recent analysis by Coinbase's David Duong indicates the liquidation of bankrupt crypto exchange FTX will proceed gradually, mitigating market impact. FTX cryptocurrency sales face weekly limits of $50-100 million initially. Significant FTX assets like Solana are locked until 2025. Additional safeguards require advance notice and oversight for selling insider-affiliated tokens. Duong believes the controlled liquidation pace combined with macroeconomic trends of easing Fed policy point to continued Bitcoin strength despite FTX fallout. The analysis suggests FTX collapse is unlikely to flood the broader cryptocurrency market if liquidation undergoes proper governance. Key takeaways:
- FTX liquidations governed by strict weekly sales limits of $50-100 million
- Large FTX holdings in Solana locked until 2025, limiting sudden sell-off
- Selling insider tokens requires 10-day notice and committee approval
- Coinbase analyst expects Fed easing in 2023-2024, supporting Bitcoin strength
- Gradual liquidation pace and oversight aim to prevent market flooding
- Proper governance of liquidation can limit contagion from FTX bankruptcy
Overall, the analysis indicates proper oversight of the FTX liquidation process can prevent panic selling and instill confidence in cryptocurrency markets despite the exchange's high-profile collapse.
Sep 20, 2023