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.

The bankruptcy of crypto exchange FTX is set to have far-reaching effects on the digital asset market. As the defunct exchange prepares to distribute $16 billion to its customers, experts are predicting a surge in buying pressure on Bitcoin and Solana.

This massive injection of liquidity could energize a market that has been battered by a months-long downturn.

A boon for Bitcoin and Solana

FTX’s planned distribution will be a major development for the crypto ecosystem. According to researcher Xremlin, a large portion of the $16 billion is likely to be reinvested in digital assets.

Investors who are already familiar with the market could be motivated to return to cryptos.

This influx of liquidity comes at a time when the market is bearish. Bitcoin has lost more than 20% of its value in the last month, while Solana is down by 22%.

The injection of fresh capital could help propel the bullish trend that investors have been waiting for.

Moreover, the distribution will offset the selling pressure created by the German government, which has carried out large sales of cryptocurrencies in recent weeks, driving down prices.

A favorable timeframe for volatility

The distribution of FTX funds will take place within a specific timeframe.

The key dates to note 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 followed, payments will begin in the third quarter of 2024.

This period coincides with the US elections, which are typically associated with increased volatility in financial markets.

The influx of liquidity from FTX could amplify price movements, especially for Bitcoin and Solana.

The potential approval of a Solana ETF, following an application by Van Eck and 21Shares in June, could also contribute to volatility.

However, Gracy Chen, CEO of Bitget, is skeptical.

“SOL still has some issues: 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.”

Overall, the distribution of FTX funds is set to have a significant impact on the crypto market.

While Bitcoin and Solana are both experiencing a downturn, this injection of capital could revive the sector.

Investors, however, remain cautious in light of the inherent volatility of these assets.

The above is the detailed content of The bankruptcy of FTX could have unexpected effects on the crypto market. For more information, please follow other related articles on the PHP Chinese website!