FTX Crypto Asset Sales Will Not Crash The Market: Coinbase Report
Digital asset exchange, Coinbase has said in a new report that a potential liquidation of FTX’s crypto holdings will not negatively affect the market.
This analysis comes after widespread fears that the liquidation of FTX digital assets to investors worth over $3.4 billion will lead to a sharp price drop depending on the asset’s weekly trade volumes.
According to the company, the sale will not cause significant changes in the market due to volume limits which are regulated in each phase of the liquidation.
At the start, the liquidations will be capped at $50 million per week and will further surge to a $100 million cap in the following weeks, unlike initial speculations of a whole $1.3 billion overnight sale.
Additionally, FTX debtors and their committees will need to approve a permanent $200 million per week with David Duong the head of institutional research adding that, “strict controls in place for selling certain ‘insider-affiliated’ tokens that require 10 days advance notice to these same committees.”
Still, on the terms, the company can enter into digital asset hedging contracts with a licensed advisor. This hedging contract is restricted to Bitcoin (BTC) and Ethereum (ETH) although a push for other coins will require the approval of creditors.
The firm is also expected to provide periodic reports (weekly and monthly) on balances, trades, sales, yields, market insights, and other revenue-generating sources.
A recent court order shows that the collapsed exchange can now sell its crypto holdings to pay back investors directly or through investments.
The collapse of FTX in November 2022 has left several effects on the market ranging from the initial market downturn wiping billions away from the market to the recent fears
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