Altcoins Potentially Vulnerable to FTX Liquidations

FTX and Alameda’s Significant Altcoin Holdings

Cryp­to ana­lyt­ics com­pa­ny, Mes­sari, has issued a warn­ing regard­ing pos­si­ble price drops for three promi­nent alt­coins due to impend­ing liq­ui­da­tions on the cryp­to exchange, FTX. The firm, along­side Alame­da, holds sig­nif­i­cant stakes in Doge­coin (DOGE), Tron (TRX), and Poly­gon (MATIC), val­ued at $37 mil­lion, $33 mil­lion, and $22 mil­lion respectively.

The pri­ma­ry con­cern here is not the absolute val­ue of these tokens, but their ratio to each asset’s active­ly trad­ed vol­ume. For instance, FTX and Alameda’s Bit­coin (BTC) hold­ings, val­ued at $353 mil­lion, account for approx­i­mate­ly 1% of the week­ly BTC trad­ing vol­ume. This indi­cates that the mar­ket can read­i­ly absorb a sig­nif­i­cant por­tion of any sell­ing activ­i­ty, a trend also observed with Ethereum (ETH).

Altcoins with Lower Liquidity Under Threat

How­ev­er, for alt­coins like DOGE, TRX, and MATIC, which have low­er liq­uid­i­ty, the sit­u­a­tion is dif­fer­ent. The $20–30 mil­lion held by FTX rep­re­sents a more sig­nif­i­cant per­cent­age (6–12%) of their week­ly trad­ing vol­ume. This could poten­tial­ly have a more pro­nounced impact on the mar­ket due to the increased dif­fi­cul­ty in absorb­ing such a large amount of sell­ing activity.

Solana and Aptos: A Gradual Liquidation

Mes­sari fur­ther high­light­ed that Alame­da owns Solana (SOL) worth $720 mil­lion and Aptos (APT) worth $66 mil­lion. These hold­ings, how­ev­er, main­ly con­sist of vest­ing right tokens. Con­se­quent­ly, they are expect­ed to be grad­u­al­ly liq­ui­dat­ed, which should soft­en their poten­tial impact on the markets.

Market Impact: A Tale of Liquidity and Volume

The main take­aways from this report are the poten­tial risks faced by cer­tain alt­coins with low­er liq­uid­i­ty, such as DOGE, TRX, and MATIC, due to the upcom­ing FTX liq­ui­da­tions. While the BTC and ETH mar­kets are like­ly to absorb such liq­ui­da­tions due to their high­er trad­ing vol­ume, the same can­not be said for these alt­coins. There­fore, traders and investors should be aware of these dynam­ics when mak­ing invest­ment decisions.

Fur­ther­more, while Alameda’s sig­nif­i­cant hold­ings of SOL and APT are siz­able, their grad­ual liq­ui­da­tion strat­e­gy is like­ly to min­i­mize their poten­tial impact on mar­ket prices. How­ev­er, any changes to this strat­e­gy could sig­nif­i­cant­ly affect these coins’ mar­ket dynamics.