The Distribution of $16 Billion in Cash by FTX Could Propel Bitcoin and Solana

The
bankruptcy
of
FTX
could
have
unexpected
effects
on
the
crypto
market.
While
the
defunct
exchange
is
preparing
to
redistribute
$16
billion
to
its
aggrieved
customers,
experts
are
predicting
significant
buying
pressure
on
Bitcoin
and
Solana.
This
massive
injection
of
liquidity
could
well
energize
a
market
that
has
been
in
decline
for
several
months.

A
welcome
influx
of
capital
for
Bitcoin
and
Solana

The
distribution
planned
by
FTX
represents
a
considerable
windfall
for
the
crypto
ecosystem.
According
to
researcher
Xremlin,
a
significant
portion
of
these
$16
billion
should
be
reinvested
in
digital
assets.
Investors,
already
familiar
with
this
market,
could
indeed
be
tempted
to
bet
on
cryptos
again.

This
massive
arrival
of
liquidity
occurs
in
a
bearish
market
context.
Bitcoin
has
lost
more
than
20%
of
its
value
over
the
past
month,
while
Solana
shows
a
22%
drop.
The
injection
of
new
capital
could
therefore
act
as
a
catalyst
and
restart
the
bullish
dynamic
that
investors
have
been
eagerly
awaiting.

Furthermore,
this
distribution
could
counterbalance
the
selling
pressure
exerted
by
the
German
government.
They
have
indeed
carried
out
significant
sales
of
cryptocurrencies
in
recent
weeks,
weighing
down
prices.

The
process
of
distributing
FTX
funds
is
set
in
a
particular
context.
The
key
dates
to
remember
are
August
16,
2024,
the
deadline
for
creditor
voting,
and
October
7,
2024,
for
the
final
approval
of
the
liquidation
plan.

If
the
schedule
is
respected,
payments
should
begin
by
the
end
of
the
third
quarter
of
2024.
This
period
coincides
with
the
US
elections,
traditionally
synonymous
with
increased
volatility
in
the
financial
markets.
The
influx
of
liquidity
from
FTX
could
thus
amplify
price
movements,
particularly
for
Bitcoin
and
Solana.

The
potential
approval
of
a
Solana
ETF,
following
the
application
by
Van
Eck
and
21Shares
at
the
end
of
June,
could
also
be
an
additional
volatility
factor.
However,
Gracy
Chen,
CEO
of
Bitget,
remains
cautious:

SOL
still
has
some
issues:

• Firstly,
  there
  is
  the
  stability
  and
  security
  of
  the
  Solana
  network.
  Since
  its
  launch,
  the
  Solana
  network
  has
  experienced
  outages
  almost
  every
  year.
  The
  most
  recent
  shutdown
  occurred
  on
  February
  6
  of
  this
  year
  due
  to
  a
  failure
  in
  the
  program
  loading
  mechanism
  and
  lasted
  4
  hours
  and
  46
  minutes.
  As
  a
  high
  TPS
  blockchain,
  a
  downtime
  of
  more
  than
  4
  hours
  could
  potentially
  impact
  a
  massive
  amount
  of
  data
  waiting
  to
  be
  recorded
  on
  the
  blockchain.
• Secondly,
  there
  is
  the
  upcoming
  large-scale
  unlocking:
  FTX
  is
  expected
  to
  unlock
  8.29
  million
  SOL
  tokens
  (equivalent
  to
  approximately
  $1.4
  billion)
  in
  March
  2025.
  This
  could
  potentially
  affect
  the
  stability
  of
  SOL
  token
  prices.
• Thirdly,
  there
  is
  the
  centralization
  of
  validation
  nodes:
  currently,
  Solana
  has
  5,440
  validation
  nodes,
  of
  which
  about
  37%
  are
  located
  in
  the
  United
  States,
  introducing
  some
  centralization
  risk.
  If
  US
  regulatory
  authorities
  take
  unfavorable
  actions
  against
  Solana,
  this
  could
  significantly
  impact
  the
  Solana
  network
  and
  the
  price
  of
  the
  SOL
  token.
  Conversely,
  this
  also
  suggests
  that
  the
  United
  States
  exerts
  significant
  control
  over
  the
  Solana
  network,
  which
  could
  influence
  the
  SEC’s
  decision
  to
  approve
  a
  SOL
  ETF.

Considering
these
factors,
excluding
political
elements,
I
think
the
probability
that
the
application
for
a
SOL
ETF
will
be
approved
is
low.
Other
tokens,
like
DOGE
and
SHIB,
have
relatively
low
market
capitalizations
and
face
high
price
volatility
and
potential
market
manipulation
risks.
Therefore,
I
think
it
is
unlikely
that
the
United
States
will
launch
other
crypto
ETFs
in
2024.

In
conclusion,
the
distribution
of
FTX
funds
could
well
mark
a
turning
point
for
the
crypto
market.
While
Bitcoin
and
Solana
are
going
through
a
difficult
phase,
this
injection
of
fresh
capital
could
breathe
new
life
into
the
sector.
Investors
remain
cautious,
however,
aware
of
the
inherent
volatility
of
these
assets.

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