Cryptos Did NOT Crash yet…Will Cryptocurrencies Crash soon?

The cryptocurrency landscape saw a sea of red on Monday, September 11, with traders on edge about the potential implications of a series of forthcoming events, notably the FTX’s potential $3 billion liquidation and the impending release of the CPI data, both scheduled for September 13.

Market Statistics

Recent statistics from QuantifyCrypto reveal a downtrend across the top 50 cryptocurrency projects. The overall market cap of cryptocurrencies plunged by over $10 billion, marking an accumulated decline of nearly 2% over the previous 24-hour period.

FTX Liquidation: What’s the Story?

FTX reportedly holds $3.4 billion in crypto assets, set to be sold off in increments ranging from $100-$200 million each week. However, this action hinges on a decision from the Delaware Bankruptcy Court, which was due on September 13.

If the court grants permission for this massive liquidation, the specifics surrounding the size and regularity of these liquidations will be strategized to reduce any potential adverse market impacts. Notably, as of now, there’s no evidence to suggest that the planned FTX sell-off on September 13th has significantly impacted the market. Furthermore, if it were to occur, the process would extend over several business days.

A recent tweet from Aaron Bennett (@AaronDBennett) listed FTX’s crypto holdings ready for liquidation:

$685 million in Solana (SOL)
$529 million in FTX token (FTT)
$268 million in Bitcoin (BTC)
$90 million in Ethereum (ETH)
$67 million in Aptos (APT)
$42 million in Dogecoin (DOGE)
$39 million in Polygon (MATIC)
$35 million in BitDAO (BIT)
$29 million in XRP token (XRP)

On September 13th, #FTX will probably get the courts approval to sell these coins:

$685 million of $SOL
$529 million of $FTT
$268 million of #btc
$90 million of #eth
$67 million of $APT
$42 million of #doge
$39 million of $matic
$35 million of $BIT
$29 million of $XRP… pic.twitter.com/RdzXHQzUO2
— Aaron Bennett (@AaronDBennett) September 10, 2023

Will Cryptocurrencies Crash? U.S. CPI Data to Watch For

Coinciding with the anticipated court ruling on the FTX’s potential asset sell-off is the release of August’s U.S. CPI data. This data is a pivotal factor in guiding the Federal Reserve’s decisions on interest rates, thereby influencing both the crypto and stock markets.

An expected CPI rise to 3.6% (up from the previous month’s 3.2%) suggests that the cryptocurrency market might already be adjusting for another potential hike in interest rates. Yet, it’s noteworthy that while the year-on-year August CPI is projected to jump by 40 basis points over July’s figures, the Federal Reserve typically leans on the Core CPI data for its decision-making process. Given the forecasted decline in August’s Core CPI to 4.3% (down from July’s 4.7%), the market largely anticipates no hikes in the interest rates come September 20.