Bitcoin briefly dropped below $25,000 for the first time in three months, while speculation that FTX could begin sales of digital assets through its bankruptcy process weighed on other cryptocurrencies.
The largest digital currency slumped as much as 3.3% to $24,958 on Monday, the least since June 15, when BlackRock Inc. applied to become the first to offer a US exchange-traded fund that invests directly in Bitcoin. The US Securities and Exchange Commission has since deferred making a decision on the filing, as well as on several others.
“We’ve got 8 straight weeks of the dollar strengthening, which puts downward pressure on the Bitcoin price,” said James Butterfill, head of research at CoinShares. “There’s also continued disappointment about Bitcoin regulation, and we have the court decision on a whole range of FTX crypto assets like Solana that could experience selling pressure.”
Solana slipped for a fourth consecutive trading session, bringing its drop over that period to around 10%.
An impending sale of assets by the defunct crypto exchange FTX and its affiliate companies helped to fuel market volatility, prompted in part by a filing from the platform detailing its remaining holdings. A presentation showed FTX is presently holding nearly $1.2 billion in SOL, the native token of the Solana network, as well as $560 million in Bitcoin and $192 million in Ether.
FTX’s controllers sought court approval to appoint Galaxy Digital as an investment manager to oversee its token holdings in August. It was hoped that Galaxy could reduce the outsized impact of FTX’s sales on the broader market by using methods such as limiting the amount of tokens that could be sold each week, hedging some of its Bitcoin and Ether holdings and locking up other assets in return for a passive yield.
The exchange asked a court last month for approval to sell or transfer digital assets. A hearing is scheduled for Sept. 13.
“People are preemptively speculating downward pressure for SOL,” said Zaheer Ebtikar, founder of crypto fund Split Capital. “As a result, SOL will be heavy for some time.”
--With assistance from Emily Nicolle.