Cryptocurrency
FTX’s $3.4B crypto liquidation: What it means for crypto markets
The FTX bankruptcy lawsuit reached a key juncture in the second week of September after the United States Bankruptcy Court for the District of Delaware approved the sale of $3.4 billion worth of crypto assets.
The court also approved $1.3 billion in brokerage and government-recovered assets as part of the liquidation process, with $2.6 billion in cash bringing the total tally to $7.1 billion in liquid assets.
Among the different cryptocurrencies set for liquidation, Solana (SOL) tops the pile with a value of $1.16 billion, and Bitcoin (BTC) is the second-largest asset held, valued at $560 million.
Other assets to be liquidated include $192 million in Ether (ETH), $137 million in Aptos (APT), $120 million in Tether (USDT), $119 million in XRP (XRP), $49 million in Biconomy Exchange Token (BIT), $46 million in Stargate Finance (STG), $41 million in Wrapped Bitcoin (WBTC) and $37 million in Wrapped Ethereum (WETH).
Bitcoin, Ether and insider-affiliated tokens can only be sold after giving a 10 days advance notice to U.S. trustees appointed by the Department of Justice. The court also permitted hedging options for these assets.
The allowance for hedging is significant because FTX can use various financial instruments, such as futures, options and perpetual swaps to offset the losses.
The ruling drew industry-wide attention due to the significant amount of crypto assets approved for sale, with many questioning the potential impact on the crypto market.
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Joshua Garcia, partner at Web3-focused legal firm Ketsal, told Cointelegraph that determining whether the liquidation was the right decision is challenging. He said that bankruptcy courts have to focus on what is good for creditors, and creditors may care more about the recovery of funds rather than a potential slump in the price of the assets being liquidated.
“Whether or not this decision impacts the token price is perhaps not the court’s primary concern. The potential or imagined market impact may mean nothing to a judge or creditors committee if it doesn’t make creditors whole, at least in the eyes of the court. The concern here is millions of users suffered substantial losses due to FTX’s actions. Making victims as whole as possible is the top priority.”
The discovery of billions of dollars of liquid assets also relieved many creditors in the case.
Blake Harris, an asset protection attorney, believes unearthing liquid assets can be a game-changer in the FTX bankruptcy case. He told Cointelegraph that the newfound liquid assets “could offer more flexibility in asset management, allowing for a strategic approach that balances immediate legal requirements with broader market implications,” adding that “the discovery of such assets could provide some relief in terms of meeting immediate financial obligations, but it’s also essential to consider how these assets will be managed moving forward to prevent similar situations in the future.”
Market analysts predicted that Solana and Aptos prices have the highest chance of facing price volatility after liquidation based on each token’s daily trading volume.
How much of an impact will FTX’s liquidation have on the market?#SOL (81%) and #APT (74%) will have the most impact when you look at the daily trading volume of each token#BTC, #XRP, and #BNB liquidations will have very little impact on the market as each are 1% or less of… pic.twitter.com/XXIoZbKfBm
— Velvet.Capital (@Velvet_Capital) September 17, 2023
FTX liquidation won’t risk a crypto market cascade
The bankruptcy court has taken measures to ensure that the liquidation of FTX assets won’t become a burden for the crypto market.
The court order permits FTX to sell digital assets through an investment adviser in weekly batches in accordance with pre-established rules. Galaxy Digital has been entrusted with liquidating the assets and maximizing returns for FTX’s creditors while ensuring market stability.
The court also permitted FTX “to utilize staking options available through their qualified custodians using their respective private validators if the Debtors determine in the reasonable exercise of their business judgment that such activities are in the best interests of their estates.”
In the first week, there will be a $50 million cap on the sale of assets, followed by a $100 million cap in the succeeding weeks. The cap can be increased up to $200 million per week with the previous written consent of the creditors’ committee and ad hoc committee after court approval.
Anthony Panebianco, a commercial business litigator, told Cointelegraph that legally, a court may permit a debtor to liquidate its assets “outside the normal scope of business” in order to maximize the value from the sale to repay creditors, adding:
“The interesting part is that the court took an additional step to look at the general marketplace for the assets it is granting liquidation of. That is, the court is looking at protecting both creditors and non-creditors of FTX by the manner in which it has ordered the liquidation process.”
He also highlighted the different liquidation strategies for BTC and ETH. He said the “court-approved hedging arrangements for Bitcoin and Ether are subject to certain investment guidelines,” adding that “the court did not include Solana in these eligible assets for hedging arrangements, likely because of FTX’s large position in Solana. All three appear to be eligible for staking arrangements, again with oversight.”
Among all crypto assets held by FTX slated for liquidation, Solana became a major point of discussion owing to the $1.1 billion of the asset on the bankrupt crypto exchange’s balance sheet. According to market analysts, people considering a short position should be wary of the unlock period of the tokens held by FTX, with a complete unlock in 2028.
Looking at FTX’s SOL staking unlock schedule, a significant chunk of these tokens will slowly make their way to the market via linear vesting or scheduled unlocks until 2028, with the largest unlock scheduled for March 2025. Most of the SOL is locked in staking contracts.
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The linear vesting program offers a simple mechanism to gradually release a token balance over certain periods.
Currently, only 24% of the total $1.16 billion SOL tokens have been unlocked. Apart from Solana, Aptos tokens are also 100% locked and will be unlocked in phases over the next few years.
In its own analysis, Coinbase crypto exchange said that the scheduled and phased liquidation will keep the market stable, noting the strict controls in place for selling certain “insider-affiliated” tokens and a major part of FTX’s SOL holdings locked up until around 2025 due to the token’s vesting schedule.
While many experts state that markets are more or less safe amid the FTX liquidation, the exchange’s saga is far from over, with former CEO Sam Bankman-Fried’s legal team sparring with prosecutors for special conditions ahead of the trial.
Moreover, the exchange’s alleged illegal behavior has dealt a significant blow to public trust in the crypto ecosystem.
Crypto analyst Michaël van de Poppe has made a bold prediction, forecasting that the price of Bitcoin could reach $500,000, with Ethereum’s soaring past $20,000 in the coming years.
His outlook, supported by macroeconomic trends and growing institutional adoption, suggests that the crypto market is on the cusp of an unprecedented rally.
Overcoming ‘Bear Market PTSD’
Market sentiment is currently quite low following one of the biggest daily sell-offs in crypto history, which saw more than $400 billion wiped off in less than a day. However, while Van de Poppe acknowledges the bearish outlook, he argues that the market is primed for a major bull run.
According to him, a “perfect storm” is brewing, fueled by growing institutional adoption and the U.S. government’s more tolerant stance on crypto. This includes a proposal for a national digital asset stockpile. Additionally, institutions are launching crypto products providing greater market access and banks have been given the leeway to offer custody services following the SEC’s revocation of SAB 121.
Van de Poppe admitted that many investors were skeptical, still haunted by past downturns, a phenomenon he called “bear market PTSD,” which makes it hard for traders to believe in a long-term uptrend. Nonetheless, he argued that Bitcoin and Ethereum’s trajectories should not be judged by past cycles alone, especially given their increasing global adoption and the ongoing influx of institutional capital, including millions spent on crypto by an organization linked to U.S. President Donald Trump.
A shifting macroeconomic landscape could also boost crypto’s explosion. The analyst suggests that China’s economic strategy to deal with Trump’s new tariffs could create the perfect condition for altcoins to thrive.
In his opinion, the Asian giant has two options to counter the U.S.: devalue its currency to continue exporting products into the United States or focus on its own domestic market to become stronger. If it chose the second option, it would mean selling its dollar reserves, buying back the renminbi, and making it solvent.
Such a situation, in Van de Poppe’s opinion, would cause the dollar to lose some of its strength, and a weaker dollar coupled with lower yield bonds often leads to increased capital flow into digital assets.
Exponential Gains
Taking everything into consideration, Van de Poppe outlined two likely possibilities. In the blow-off top scenario, he envisions a rapid bull run, similar to the dot-com boom of the ‘90s, which could see BTC shoot up to anywhere between $300,000 and $500,000 before a sharp correction.
Ethereum would follow suit and could climb past $20,000 with the acceleration of institutional adoption, potentially powered by its new marketing initiative, Etherealize.
The second option would be an extended supercycle, leading to a slower but self-sustaining rally that could drive Bitcoin’s value towards $1 million over the next few years. ETH would also benefit from taking advantage of the expected growth of layer-2 networks and institutional DeFi integration to push to $30,000.
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TL;DR
- Large investors bought 750 million DOGE during the recent dip, potentially setting the stage for a price rebound.
- While some analysts expect a further drop to $0.17, historical trends suggest the possibility of another explosive bull run for Dogecoin in the coming months.
Time for a Reversal?
The cryptocurrency market has suffered substantial losses in the past week, mainly due to the crash witnessed on February 3. Bitcoin (BTC) is down 6% for that timeframe but it was the altcoins that took the major hit.
The OG meme coin, Dogecoin (DOGE), was among the biggest losers, with its price plunging well below $0.30 and tanking by 21% weekly (per CoinGecko’s data).
However, it seems like whales have interpreted the downtrend as a “buy the dip” opportunity and increased their exposure to the asset. X user Ali Martinez revealed that large investors purchased 750 million tokens (worth almost $200 million) during the correction. “This is a strong sign of confidence in the market,” the analyst claimed.
Whale accumulation is often seen as a bullish signal since it could make some traders follow suit and thus trigger a potential price uptrend. The buying spree also leaves fewer assets available on the open market, meaning DOGE’s valuation might head north (assuming demand remains constant or increases).
The whales’ latest actions contrast to those at the beginning of the month. Back then, they offloaded 270 million DOGE in the span of 24 hours, which was shortly after, followed by a price decline.
DOGE Predictions
The meme coin’s market dynamics have caused numerous people to speculate on its next potential move. The X user AMCrypto assumed that DOGE might be headed for a further decline to as low as $0.17 before rallying toward a new all-time high.
Trader Tardigrade and KALEO also chipped in recently. The former forecasted a massive bull run, citing the token’s historical performance:
“In the 2016 pullback, DOGE retraced 59.76%, followed by a +9,221% bull run. In the 2020 pullback, DOGE retraced 56.2%, followed by a +30,693% bull run. When in doubt, check the macro chart.”
KALEO was bullish, too, seeing $0.25 as “a solid entry and practically free compared to where we’ll see it a few months from now.”
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[PRESS RELEASE – Singapore, Singapore, February 6th, 2025]
Academic Labs, a notable innovator in the education sector, has announced its listing on Bitpanda, one of Europe’s largest cryptocurrency exchanges. This milestone follows the release of Whitepaper 2.0, which details advancements in its EduFi Ecosystem, built on the Solana blockchain. The whitepaper introduces the AAX Chain and the AI-Agent layer, two innovations aiming to transform education by harnessing AI and Web3 technologies. Notably, Academic Labs has demonstrated remarkable potential, with its cryptocurrency volume doubling and rising by 70% even when the market was down, indicating strong prospects for 2025.
Whitepaper 2.0 introduces two innovations: the AAX Chain and the AI-Agent layer. The AAX Chain, built on the Solana blockchain, harnesses its high-speed, low-cost, and scalable infrastructure to optimize educational resources and facilitate seamless knowledge discovery, curation, and sharing. The native AAX Token, following the SPL token standard, serves as the lifeblood of the ecosystem, enabling value exchange, governance, and incentivization.
The AI-Agent layer enhances personalized learning by leveraging the power of advanced machine learning algorithms. By analyzing large amounts of data from the Universal Library of Knowledge and the comprehensive Learner Data Layer, the AI-Agent generates adaptive learning paths, content recommendations, and targeted support, ensuring that each learner receives a tailored educational experience.
Whitepaper 2.0 also highlights the integration of decentralized identity (DID) within the Academic Labs EduFi Ecosystem. Leveraging the Solana blockchain’s capabilities, learners can create and manage their digital identities securely and transparently, empowering them to showcase their achievements and skills across various platforms while maintaining control over their educational data.
Furthermore, the whitepaper explores the incorporation of decentralized science (DeSci) and decentralized finance (DeFi) applications within the ecosystem. By tapping into Solana’s robust DeFi infrastructure, Academic Labs offers learners and educators novel opportunities to engage with tokenized assets, participate in yield farming and staking programs, and access innovative funding models for educational projects and research endeavors.
The tokenomics of the AAX Token, as detailed in the whitepaper, ensure the long-term sustainability and growth of the Academic Labs EduFi Ecosystem. With a carefully designed token allocation and unlocking schedule, the ecosystem is structured to align incentives and foster long-term commitment to the platform’s success.
Prior to Whitepaper 2.0, Academic Labs had already made steady progress in the EduFi space, launching a successful MVP, hosting hackathons and courses at top universities, and empowering various ecosystems with more than 2 million people.
The whitepaper outlines an ambitious timeline for expanding the Academic Labs EduFi Ecosystem. The platform plans to launch a suite of new products powered by AI and gamification functions in the coming months, enhancing user engagement and learning outcomes. Additionally, Academic Labs aims to secure new listing opportunities for the AAX Token across global cryptocurrency exchanges, increasing liquidity and accessibility for users worldwide.
Following the prior listing on Gate.io, on February 7th, Academic Labs will be listed on Bitpanda, one of Europe’s largest cryptocurrency exchanges. This represents a key step in Academic Labs’ efforts to expand its education-focused initiatives through Web3 and AI.
With the introduction of the AAX Chain, AI-Agent layer, and the planned expansion of its product offerings and token listings, Academic Labs aims to develop AI-driven solutions for the education sector. The integration of advanced technologies, along with the platform’s existing ecosystem, supports its ongoing efforts to enhance digital learning experiences.
About Academic Labs:
Platform: https://acad.live
CoinGecko: https://www.coingecko.com/en/coins/academic-labs
Gate: https://www.gate.io/tr/trade/AAX_USDT
Bitpanda: https://www.bitpanda.com/en/bitpanda-spotlight
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