Stop the FUD, HEre’s Why FTX Can’t Sell Its Solana Holdings

Over the last weekend, the Solana (SOL) price came under major selling pressure with its price slipping under $18.50 levels recently. This is because Solana investors have turned anxious that crypto investors could dump their Solana holdings after the FTX hearing in Delaware Bankruptcy Court on Wednesday, September 13.

Reportedly, FTX is seeking approval for its liquidation of $3.4 billion in SOL, FTT, BTC, ETH, and other crypto asset holdings. Crypto exchange FTX held Solana as a major part of its reserves. However, they sold SOL in huge quantities when the exchange crashed last year in November 2022.

Of the total $3.04 billion in crypto assets held by FTX, Solana constitutes the lion’s share. As of January 17, FTX’s cryptocurrency holdings were estimated to consist of approximately $685 million in Solana (SOL) tokens, $529 million in FTT tokens, $268 million in Bitcoin (BTC), $90 million in Ethereum (ETH), along with a range of other assets, including Aptos, Dogecoin, Polygon, XRP, and various stablecoins.

Will FTX Really Sell Solana Holdings?

However, many people seem to have overlooked a significant detail. The SOL tokens held by FTX debtors are not immediately available for sale. In contrast to the impression conveyed by the shared visual data, these SOL tokens are subject to a lockup agreement. FTX, in conjunction with Alameda, had previously obtained 16% of the SOL supply directly from the Solana Foundation.

This acquisition came with certain conditions, primarily a lockup schedule. The current holding of 47.51 million SOL, which represents 8.82% of Solana’s eventual total supply, is bound by this agreement.

Hence, the misconception that this SOL reserve is readily tradable and poised for a market sell-off is fundamentally incorrect. The fact is that these tokens are locked and will follow a linear vesting process spanning from 2025 to 2028.

According to the terms of the agreement, the SOL tokens will experience gradual monthly releases until January 2028. Furthermore, specific tranches, such as the 7.5 million SOL acquired from Solana Labs by Alameda Research, will only become accessible on March 1, 2025. Another tranche of 61,853 SOL is set for unlocking on May 17, 2025.

Thus, there’s little reason for investors to panic amid all the FUD around Solana at this point.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.