Willy Woo: Poor Performance of Crypto Market Traceable to FTX Liquidation Mechanism, Continued Popularity of Cash-and-Carry Arbitrage Strategy Keeps Releasing Selling Pressure

Crypto News: On March 26, crypto analyst Willy Woo stated that the current market sentiment is weak and the overall performance of altcoins is poor. The main reason can be traced back to the asset liquidation mechanism that emerged after the FTX bankruptcy, involving “discounted token lock-up trading combined with futures hedging.” During FTX’s liquidation process, a large amount of locked SOL was sold under a “pay first, deliver later” agreement. Due to limited liquidity, these sales often occurred at discounts exceeding 60%. Some hedge funds bought these tokens and hedged price risk through futures markets, while also earning staking and basis yields, achieving nearly risk-free returns of about 70%–80%. This strategy then spread across the industry, with many project teams and their foundations selling locked tokens to hedge funds in advance. The hedge funds used derivatives markets to hedge and release selling pressure, making it difficult for ordinary investors to earn excess returns. This has become a significant reason for the poor overall performance in this cycle, indicating that some projects’ nominal future unlock pressures have already been absorbed in advance. The actual selling pressure in the next bull market may be lower than expected. Ordinary investors in the crypto market find it hard to gain an advantage, so it is recommended to prioritize core assets like Bitcoin.