Trapped FTX users switch to major coins and execute 'synthetic withdrawals', leading to relatively higher prices for ether and Solana on the troubled exchange. Reports godbole17
, according to Markus Thielen, head of research and strategy at Matrixport.
Users are supposedly executing a synthetic or paper withdrawal by purchasing ETH, SOL perpetual contracts on FTX and selling or shorting an equal amount on Binance, creating a market-neutral or delta-neutral position. That way, users get custody of their funds, at least on paper, and stand protected against an extended price slide.
The assumption here is that a potential FTX bankruptcy will trigger another round of panic selling in the market. And if FTX secures funding, clients will be made whole. However, both things are not promised.
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