Solana (SOL) has seen a significant 6% price drop over the last 24 hours, igniting concerns within the crypto community. This decline in Solana’s value is closely linked to the looming spectre of FTX, a cryptocurrency exchange that went bankrupt.
FTX is scheduled for a pivotal hearing in the Delaware Bankruptcy Court on September 13, where it intends to seek approval for liquidating a substantial chunk of its crypto assets, totaling a staggering $3.4 billion. Among these assets, Solana (SOL) holds a prominent position.
The DeFi Investor has recently commented on the current state of Solana (SOL) in a tweet that shed light on the crypto market’s dynamics. In their tweet, they likely touched upon the factors contributing to Solana’s performance and the impact of FTX’s impending liquidation.
However, a crucial detail has been somewhat overlooked amidst the anxiety surrounding this potential liquidation. The SOL tokens held by FTX debtors are not immediately available for sale. A lockup agreement burdens these tokens. This arrangement was established between FTX and its affiliate, Alameda Research during their acquisition of 16% of the SOL supply from the Solana Foundation.
This lockup agreement outlines a gradual monthly release of SOL tokens, stretching to January 2028. Specific tranches, including the 7.5 million SOL acquired from Solana Labs by Alameda Research, will only become accessible on March 1, 2025, with another 61,853 SOL set to unlock on May 17, 2025.
Considering these lockup conditions, the fear of an immediate and massive SOL token sell-off appears unjustified. If the court greenlights the liquidation plan, strict conditions would govern FTX’s potential token sales. They would be limited to a maximum of $100 million weekly, possibly increasing this cap to $200 million on an individual token basis.
A tweet shared by a prominent crypto figure Gumshoe offered an intriguing perspective on the Solana (SOL) situation. Amid concerns about a $600 million SOL sale over five years due to FTX’s troubles, Gumshoe highlighted the context. FTX’s collapse caused SOL to drop to $8, a major event. Compared to that, the gradual token release may have a lesser impact.
FTX has implemented these measures to minimize the market effects of sales while ensuring that it fulfills its obligations to creditors which currently awaits court approval. It is anticipated to be a topic of discussion during the upcoming Delaware Bankruptcy Court hearing on September 13.
Despite the prevailing uncertainty in the Solana market, the immediate and widespread sell-off of SOL tokens held by FTX seems improbable, given the lockup agreements and the stringent restrictions outlined in the proposed liquidation plan. Investors are advised to stay vigilant but not succumb to undue panic in response to these developments.
