Cryptocurrency markets experienced significant turbulence on Monday as traders reacted to the looming possibility of asset sales by the bankrupt exchange FTX. Bitcoin (BTC), the leading cryptocurrency, plummeted more than 2% and briefly touched a low of $24,963 during U.S. morning hours, marking its first dip below the $25,000 threshold since mid-June. Although it has recovered somewhat, BTC is currently trading at around $25,140, reflecting a 2.6% decline in the last 24 hours.
Ether (ETH), the second-largest cryptocurrency by market capitalization, was not immune to the downturn, falling 3.2% on the day and trading at $1,560. This downward trend extended to alternative cryptocurrencies, or altcoins, with Solana (SOL) experiencing the most substantial loss, plummeting over 8%. Toncoin (TON) and layer 2 Arbitrum (ARB) suffered similar declines, and Ripple’s XRP faced a 5% loss.
The market turbulence followed reports of FTX potentially obtaining approval from a bankruptcy court to initiate the sale of assets from its vast cryptocurrency holdings, which total $3.4 billion. Singapore-based digital asset services provider Matrixport warned in a market report on Monday of an impending “altcoin crash” if FTX proceeds with the sale of tokens, possibly as early as this week.
Solana (SOL) appears to be particularly vulnerable to this selling pressure, as FTX holds a substantial $1.16 billion worth of SOL tokens, representing nearly 16% of the token’s total supply, according to CoinDesk Indices data.
In addition to SOL, FTX holds $560 million in Bitcoin (BTC) and substantial amounts of less-known illiquid micro-cap tokens. The exchange has enlisted the assistance of digital asset investment firm Galaxy to facilitate these asset sales.
The market’s response to FTX’s potential asset liquidation underscores the sensitivity of cryptocurrency markets to external factors, including regulatory actions and the financial health of major players in the industry. Market participants are closely monitoring the situation, as it may have broader implications for the cryptocurrency market’s stability and investor sentiment in the coming days.