FTX’s Potential Liquidation of SOL Could Trigger “Sell the Rumor, Buy the News” Reaction

3:28 pm
September 15, 2023

In the aftermath of FTX’s collapse in 2022, Solana (SOL) has struggled to regain momentum in the market. The liquidators of FTX have been given permission to sell $3.4 billion worth of crypto assets, including $1.2 billion in SOL, Solana’s native token.

Despite recent negative sentiment and downward volatility for most assets, a top crypto analyst believes that SOL could experience a “sell the rumor, buy the news” scenario.

SOL Price and FTX Liquidation

As of Friday morning, Solana is trading around $19.10, showing a 1.5% increase over the past 24 hours. This week, FTX, the bankrupt crypto exchange, received court approval to liquidate its crypto assets as part of its claims plan. While FTX holds $1.2 billion of SOL, a majority of it is staked or locked up in contracts. Therefore, the monthly release of only a fraction of the holdings is unlikely to have a significant impact on the coin’s price.

In response to FTX’s court approval, crypto analyst Michael van de Poppe commented:

“The Solana, which corresponds to $1.2 billion of the assets of FTX, is mostly staked and can’t be sold. Now, what’s next? First of all, FTX can sell up to $200m of assets on a weekly basis for their corresponding clients so the liabilities could be erased. This can add some additional sell pressure on the markets, but that’s probably already priced in. The major fact is that we should be seeing a case of Solana being sold off massively, but as an anticipation, Solana was already sold off entirely in the past week and could result into a ‘sell the rumour, buy the news’ type of thing.”

According to the analyst, most of the SOL held by FTX cannot be sold, and the portion that can hit the market has already been mostly sold.


What is SOL?

SOL is the native token of the Solana blockchain platform. It is used for various purposes, including transaction fees and staking in the network.

What is FTX?

FTX is a cryptocurrency exchange that experienced a collapse in 2022. It is currently undergoing liquidation.

What does “sell the rumor, buy the news” mean?

“Sell the rumor, buy the news” is an investment strategy based on the idea that market speculation before an event tends to drive prices lower, while the actual news or event can result in a price rebound. In the case of SOL, there is anticipation of a massive sell-off, but if it has already been sold off prior to the news, it could trigger a buying opportunity.

What impact will FTX’s liquidation have on SOL’s price?

Since most of the SOL held by FTX cannot be sold, the impact on SOL’s price is expected to be minimal. Additionally, the market has likely already priced in the potential sell pressure from FTX’s asset liquidation.

Are there any risks associated with investing in SOL?

As with any cryptocurrency investment, there are risks to consider. These include market volatility, regulatory changes, and potential security vulnerabilities. It is important to conduct thorough research and consider your risk tolerance before investing in any cryptocurrency.


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