- The FTX-associated wallet moved liquidity of about $10 million from Solana to Ethereum, which has a long-term effect on Ether-based AMMs.
- Uniswap (UNI) dropped about 2.4 percent in 24 hours and its immediate hard fork SushiSwap (SUSHI) gained about 1 percent in the same period.
Insolvent cryptocurrency exchange FTX has transferred about $10 million of its recovered digital assets from the Solana network to the leading smart contract ecosystem Ethereum since the end of last month. With FTX in the process of being liquidated to make creditors while again, the transferred digital assets are expected to be liquidated, hence raising fear of increased sell pressure in an already strained crypto market. Moreover, Bitcoin and Ethereum prices have broken their YTD bullish momentum and now face more short-term sell pressure.
According to the latest crypto market data, Bitcoin and Ethereum prices traded around $25.68k and $1,629 respectively on Tuesday during the New York session.
Effects of FTX Assets Transfer from Solana to Ethereum Network
Solana gained its vast reputation from its early marketing strategy of being an Ethereum killer. The mission was, however, made more severe following the collapse of FTX and its sister investment firm Alameda Research. Notably, the FTX cryptocurrency exchange was a major supporter of the Solana ecosystem by providing liquidity for the SPL tokens. As a result, FTX was left holding a significant amount of SPL tokens after filing for Chapter 11 bankruptcy protection in the United States.
🚨 FTX wallets on the move🚨
Over $1.5B worth of $SOL, SPL tokens, and Wrapped #Bitcoin in FTX’s Solana addresses are shifting‼️
Looks like they’re gearing up for potential sell-offs.
Keep an eye on this, especially the ~$200M in #Solana Wrapped $BTC.#crypto #bitcoin … pic.twitter.com/sRDI6hvTJD
— Pump House 🍥 (@pumphouz) September 3, 2023
Similarly, FTX was holding a significant amount of its assets in Ethereum, hence making its liquidation process a risk for the Ether price action in the short term.
Long-Term Beneficiaries of the FTX Transfer from Sol to Ether
The decision by the current FTX administration – led by John J. Ray III, Chief Executive Officer and Chief Restructuring Officer of the FTX Debtors – to transfer about $10 million from Solana to Ethereum had a physical and psychological impact on respective DeFi projects. On the top list, the FTX transfer from Solana to Ethereum meant that liquidity was available on both networks, but the latter was more stable for institutional investors.
Top automated market makers (AMM) on the Ethereum network – Uniswap (UNI) and SushiSwap (SUSHI) – are expected to greatly benefit from the recent gesture from FTX. According to the latest crypto market data provided by Binance-backed Coinmarketcap, Uniswap (UNI) traded around $4.34, down approximately 1.4 percent in the past 24 hours.
On the other hand, SushiSwap (SUSHI) traded around $0.577, up approximately 2.3 percent in the past 24 hours. Worth noting that SushiSwap was developed through a hard fork on Uniswap in a bid to diversify the AMM market and also add additional features not previously present on Uniswap.
With FTX holding over $5 billion in liquid digital assets, there is a high chance that the currency administration will gap on existing AMMs on Ethereum to increase the efficiency of liquidation and reduce friction with OTC transactions.
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