Altcoins in Trouble? Matrixport Issues Warning as FTX Plans $3.4B Dump

Several popular altcoins continue to trade 90% below all-time highs.

Man shouts out a warning againts FTX.
Created by Kornelija Poderskytė from DailyCoin
  • Altcoins are trading at a significant discount compared to the height of the last bull market cycle.
  • Despite the discount, Matrixport does not favor buying in the short term.
  • FTX’s bankruptcy proceedings pose a significant concern.

Altcoins are typically the worst-hit in crypto bear market cycles, and the current cycle is no different, with many popular assets like Cardano (ADA) and Solana (SOL) trading about 90% below their all-time highs despite price recoveries in Q1 2023. 

Amid this drawdown, the question for many investors is whether now is a good time to buy. Prominent crypto financial service firm Matrixport has weighed in and does not appear optimistic.

Matrixport Warns Investors to Steer Clear

In a DeFi on Target report on Tuesday, September 5, shared by Matrixport Head of Research Markus Thielen, the firm urged investors to remain on the sidelines in the altcoin market, leaning in favor of Bitcoin exposure for now.

"The altcoins of the previous bull markets appear tainted and might never come back while we need a new theme for the next generation of altcoins to gain traction. In the meantime, keeping exposure to Bitcoin makes the most sense," Matrixport asserted.

To support its arguments, Matrixport further highlighted that the asset class faces significant selling pressure in the coming months, with FTX’s bankruptcy proceedings posing a primary concern.

$3.4B and More in Selling Pressure

In April 2023, FTX disclosed holding up to $3.4 billion in crypto assets. In court filings in August 2023, FTX debtors proposed selling these crypto assets in tranches of up to $200 million weekly to settle creditors. 

As highlighted by Matrixport, if approved, the proposal could see the exchange sell crypto assets, the majority of which are altcoins, till the end of the year. A recent movement of $10 million worth of crypto assets from an FTX cold wallet has already raised concerns.

Meanwhile, Matrixport warned that FTX’s bankruptcy is not the only thing placing selling pressure on the markets. The firm noted that many Venture Capital funds would also be looking to offload their altcoin bags in the coming weeks amid substantial drawdowns. 

The firm tipped token unlock schedules to determine when these VC sales will likely occur. Matrixport noted that ApeCoin and Axie Infinity’s token (AXS) were particularly at risk, with 11% token supply unlocks expected on September 17 and October 20, respectively. The price of ApeCoin and AXS have declined 24% and 32% since their last token unlock events.

On the Flipside

  • The court has not decided on the FTX proposal, with a hearing scheduled for September 13.
  • Several factors can influence the price of crypto assets, including hype and temporary market euphoria.

Why This Matters

Insight from research and analysis firms can provide helpful information for traders and investors. Matrixport is a research firm that has risen to prominence recently due to its record of reasonably accurate predictions.

Read this to learn more about Matrixport’s long-term predictions for Bitcoin:

Bitcoin Could Break $100K in 2024: Matrixport

Find out more about crypto investor sentiment in the past week:

Crypto Outflows Hit 7-Week Streak, But Sentiment May Be Turning 

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Okoya David

David Okoya is a crypto news reporter at DailyCoin based in Nigeria. He covers various topics related to the cryptocurrency industry, including exchanges, regulations, and price movements, and strives to bring fresh angles to breaking news. With experience as a freelance crypto news writer, David upholds the highest journalistic standards, telling complete stories and answering lingering questions whenever possible.