Crypto Market Tumbles Amid Fears of Selling Pressure from Bankrupt FTX Exchange

The cryptocurrency market experienced a sharp decline on Monday, with Bitcoin (BTC) falling over 2% and briefly dropping below the $25,000 level for the first time since mid-June. Ether (ETH), the second-largest cryptocurrency by market capitalization, also saw a 3.2% decrease, trading at around $1,560. The CoinDesk Market Index (CMI), which serves as a proxy for the overall market, fell by 3%.

The recent market downturn was largely driven by concerns about potential selling pressure from bankrupt exchange FTX. Traders were wary of FTX securing approval from bankruptcy court to sell its $3.4 billion worth of cryptocurrency holdings, which could result in significant token sales in the near future. This possibility has led market participants to anticipate an upcoming “altcoin crash,” with altcoins underperforming in the market.

Altcoins such as Solana (SOL), Toncoin (TON), Arbitrum (ARB), and Ripple’s XRP have all experienced notable losses. Solana, in particular, has seen an over 8% decline, likely due to FTX holding $1.16 billion worth of SOL, which accounts for nearly 16% of its outstanding supply.

According to Matrixport, a digital asset services provider, FTX’s potential crypto sales could continue to impact altcoin prices for the remainder of the year. Matrixport expressed concern about SOL’s breakdown from the $19 level and speculated that further declines could occur, potentially reaching support levels at $15 and $10.

In addition to SOL, Ethereum (ETH) is another cryptocurrency that could face further price drops. Matrixport suggested that disappointment in Ethereum’s revenue growth could contribute to a decline in its price, stating that if ETH falls below $1,500, it could potentially drop as low as $1,000.

Despite the current challenges facing altcoins, Matrixport emphasized the importance of maintaining exposure to Bitcoin, suggesting that it makes the most sense in the current market climate.

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About the Author: Daniel