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FTX to Auction Off Locked SOL Tokens, Crypto Community Eyes Discounts

Last Updated April 22, 2024 12:29 PM
Teuta Franjkovic
Last Updated April 22, 2024 12:29 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • The bankrupt FTX exchange will auction remaining locked Solana tokens, shifting from fixed-price sales.
  • Buyers are attracted to potentially lower prices despite the locked status, highlighting market demand.
  • The auction format could lead to bidding wars, impacting Solana’s short-term price movements.

The bankrupt cryptocurrency exchange FTX is gearing up  to auction off additional Solana (SOL) tokens. This move sees it transitioning from its previous fixed-price sales strategy.

Figure Markets is setting up  a Special Purpose Vehicle (SPV), designed to draw both non-US and accredited US investors.

Meanwhile, keen-eyed crypto traders are keeping their eye on the sale in the hope that they can snag some notable discounts.

Solana Token Auction Planned After Fixed-Price Sales

The FTX estate is planning to auction off  its next batch of locked Solana (SOL) tokens due to significant buyer interest/

This announcement follows the successful sale of $1.9 billion worth of Solana to major industry players like Galaxy Digital and Pantera.

Mike Cagney, CEO of Figure, has indicated the upcoming sale will be conducted through an auction. However, specific details about the sale are yet to be disclosed.

FTX did not immediately respond to a request for comment.

Strong Demand for Discounted Locked Solana Tokens in FTX Auction

The locked Solana tokens, which constituted the largest portion of FTX’s digital asset holdings during its bankruptcy, have seen strong interest  from potential buyers.

These investors are attracted by the prospect of acquiring the tokens at a discounted rate, despite the risk associated with their locked status, which restricts their sale until a specified future date. This interest underscores the market’s appetite for such assets under the right conditions, even amidst the uncertainties of FTX’s ongoing financial restructuring.

The recent sale  of roughly two-thirds of FTX’s Solana holdings generated $2.6 billion for the bankrupt estate, with each token sold at approximately $60. Given that Solana’s current market price  is around $150, this previous transaction might seem advantageous. However, the inherent volatility of cryptocurrency markets poses a risk, as the price could fluctuate significantly by the time the tokens are unlocked and available for sale.

Despite these uncertainties, there is still strong demand for the remaining locked Solana tokens. To accommodate this interest, Mike Cagneyโ€™s Figure Markets is planning to establish a Special Purpose Vehicle (SPV) . This SPV will allow both non-US and accredited US investors to participate in the upcoming auction. This initiative has also been met with approval from notable creditor Sunil Kavuri.

Bidding War Could Spark Price Volatility

The auction format adopted for the sale of FTX’s locked Solana tokens could potentially increase bidding enthusiasm, which might impact Solanaโ€™s market pricing. Given the volatile nature of cryptocurrency prices, this auction could play a significant role in shaping market dynamics in the short term.

Solana’s pricing has shown signs of recovery after a significant drop. It peaked at $210 on March 18, then fell by over 44% to a low around $116 on April 13.

Solana performance
Credit: TradingView

However, it has since made a strong recovery , trading about 30% higher from the April low. This rebound is particularly notable as Solana approaches significant resistance levels near $156. This critical poin aligns with a key Fibonacci retracement level. This resistance could serve as a pivotal point for future price movements. It could either reinforce the current uptrend if it breaks through or confirm if it fails to surpass this level.

If Solana manages to stay above the $156, it could potentially see an increase of about 22%, reaching approximately $185. On the other hand, if it struggles to break past $156, Solana might find its next level of support around $145.56. This could significantly influence Solana’s short-term trading strategy and market sentiment.

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