WillyWoo: FTX liquidation has given rise to a lock-up token arbitrage mechanism or the main reason for the poor performance of the crypto market in this round

Cryptography analyst WillyWoo wrote on the X platform that the core reason for the current sluggish market sentiment and the overall poor performance of altcoins can be traced back to the asset clearing mechanism of the "locked token discount trading + futures hedging" that was born after the bankruptcy of FTX. During the FTX clearing process, a large number of SOLs that were locked up were sold under a "payment first, delivery later" agreement. Due to liquidity constraints, they were usually sold at a discount of more than 60%. Some hedge funds used short-selling in the futures market to hedge price risks after buying, and superimposed on pledge income and basis income to achieve a near-risk-free return of approximately 70%-80%. The strategy subsequently spread in the industry. A large number of project parties and their foundations sold lock-up tokens to hedge funds in advance, which used the derivatives market to hedge and release selling pressure, making it difficult for ordinary investors to obtain excess returns and becoming an important reason for the overall poor performance of this cycle. This means that the nominal future unlocking and selling pressure of some projects has been digested in advance. The actual selling pressure in the next bull market may be lower than expected, and it is difficult for ordinary investors in the crypto market to establish advantages. It is recommended to give priority to core assets such as Bitcoin.