Cryptos fall again; FTX puts Bitcoin's $25,000 in jeopardy
There´s been a notable drop in the cryptocurrency market. Bitcoin (BTC) falls slightly after experiencing high volatility and stands at $25,800, while Ethereum (ETH) drops around 2% in the last 24 hours and trades below $1,600. Overall, the market has retreated almost 1% in market capitalization over the past day.
The reigning cryptocurrency even fell below $25,000 yesterday, on Monday, to $24,963, the first time it has broken this support since mid-June last year. Likewise, numerous altcoins such as Ripple (XRP), Dogecoin (DOGE) and Cardano (ADA) have suffered large cuts, especially Solana (SOL), which fell 8% on Monday.The reason? FTX.
The bankrupt cryptocurrency exchange once led by Sam Bankman-Fried made public its cryptocurrency holdings yesterday, which reach $3.4 billion, and has revealed payments to executives such as SBF or Gary Wang reaching $2.2 billion. In terms of holdings, the most notable are $1.162 billion SOL tokens, $560 million BTC and $192 million in ETH, as well as more than $100 million in XRP and Tether (USDT and other lesser-known microcap tokens.)
What is the problem? Today, on Wednesday, September 13, the Delaware Bankruptcy Court will decide whether to approve the liquidation of these assets. Under the plan proposed by the team of John J. Ray III, the firm's new CEO and in charge of overseeing the restructuring process, FTX could sell up to $100 million in tokens a week, an amount that could be increased to $200 million. This could generate significant selling pressure in the market.
In this sense, Matrixport experts believe that the altcoins could suffer for the remainder of the year if the sale finally occurs. Of all of them, ETH and SOL would be the most affected cryptocurrencies due to FTX's high exposure to them. Specifically, SOL will bear the brunt, as these strategists stress the "worrisome" drop following the news, which has paved the way for further declines to $15 and $10.
"Technically, the break of $1,650 makes us extremely cautious about ETH here, and we could even envision a scenario where prices materially drop lower into year-end. A decline below $1,500 could bring back the idea that ETH could decline to $1,000," the experts added.
Meanwhile, Matteo Greco, research analyst at Fineqia, stressed that the optimism generated by spot BTC exchange-traded funds (ETFs) has completely disappeared from the market following recent events. According to Greco, the market continues "the trend of low volumes and volatility observed in this third quarter."
"In the last 11 weeks, the BTC price fluctuated less than 0.75% in 8 weeks. The low volatility is confirmed by observing the 30-day BTC annualized volatility, which remains at one of the lowest levels ever recorded, despite the strong fluctuations observed during the second week of August, accompanied by a nearly 11% decline in the BTC price," Greco commented.
The strategist stressed that weekly trading volumes on centralized exchanges are at the lowest level since the end of 2020, with a cumulative weekly volume of $9 billion. The ratio of spot to futures volume has increased slightly in recent weeks, reaching the same level seen in April of this year. Low futures volume tends to correlate with lower volatility.
"Analysing the Bitcoin supply, long-term holder ratio surpassed 75% of the total supply. Long-term holder refers to the part of Bitcoin supply that did not move for more than 155 days. Currently, 75.66% of the total supply, equivalent to 14.74 million of BTC is held by long-term holders. Only 2.50 million of BTC are held by short-term holders, the lowest data since 2011," he explained.