This was in anticipation of a potential sell-off from the troubled FTX exchange that has traders on edge. The crypto has since regained some of these losses
The FTX decision on selling its crypto assets is not the only market event to occur. Experts and traders are awaiting results on the US core CPI, which could see further sell pressure on the crypto market.
FTX decision on selling crypto assets
FTX, once a giant in the crypto world, is now grappling with recouping assets. The bankrupt exchange is in the midst of seeking regulatory approval to liquidate $3.4billion in crypto assets. The Delaware Bankruptcy Court is set to make a decision on 13 September.
The proposed plan, which was first suggested in August, recommends appointing Galaxy Digital to oversee the asset sale. If approved, FTX could offload up to $100m worth of tokens weekly. This limit might be increased to $200m depending on the token.
US CPI data expected soon
Another significant event taking place on 13 September is the release of the US Core CPI data for August.
Analysts are forecasting a 0.4% monthly increase in the core CPI. A surge in inflation could prompt the US Federal Reserve to hike interest rates, potentially pushing Bitcoin prices further down.
Bitcoin’s recent volatility
Ahead of the expected FTX decision, Bitcoin’s value crashed below $25,000 on 11 September, a first in three months.
Sam Callahan, a Swan Bitcoin analyst, told Blockworks: “Bitcoin’s recent price action could have less to do with macroeconomics conditions and more about the market pricing in endogenous factors such as FTX potentially obtaining court approval to liquidate over $250 million worth of BTC on 13 September.”
Bitcoin was recently on an upward trajectory after a federal court overturned the US Securities and Exchange Commission’s decision to block the first BTC spot ETF.
There was growing anticipation with several other ETF applications in the pipeline, including one from asset management giant BlackRock.
However, the SEC’s hesitance and delays left investors hanging, resulting in reduced crypto market liquidity and dwindling interest.
As of 12 September, Bitcoin is trading at $25,813, after regaining some of its recent losses. The cryptocurrency is up 0.42% in the past 24 hours.
Altcoins feel the heat
Altcoins haven’t been spared from the recent market volatility. With FTX’s $1.16bn holdings in Solana, the cryptocurrency has seen its price tumble multiple times over the past week.
On 10 September, Solana’s value fell from $19.45 to $17.85, a crash of 8%. At the time of writing, it had similarly clawed back some of its lost value and was trading at $18.09.
Ethereum, another major player in the crypto space, is also facing challenges. It fell to $1,533 on 11 September, marking a six month low.
But FTX isn’t the only organisation expected to sell its crypto holdings.
Markus Thielen, head of research at Matrixport, said in a report on Monday: “Crypto venture capital (VC) funds are also under immense pressure to return funds to their investors. Those VC funds are likely to remain as crucial sellers of altcoins and must cash out.”