TechFlow reports that on March 26, crypto analyst Willy Woo posted on X stating that current market sentiment is weak and altcoins are broadly underperforming. The root cause traces back to an “escrowed token discount trading + futures hedging” asset liquidation mechanism that emerged following the FTX bankruptcy. During FTX’s liquidation, large quantities of staked SOL were sold under “pay-first, deliver-later” agreements—often at discounts exceeding 60% due to liquidity constraints. Some hedge funds purchased these tokens and then shorted them in the futures market to hedge price risk, while simultaneously capturing staking yields and basis yields—achieving nearly risk-free returns of approximately 70%–80%.
This strategy subsequently spread across the industry: numerous projects and their foundations began selling their escrowed tokens early to hedge funds, which then hedged positions via derivatives markets and released selling pressure. As a result, retail investors struggled to capture excess returns—a key reason behind the sector’s broad underperformance this cycle. This implies that nominal future unlock-related selling pressure for certain projects has already been front-run and absorbed. Consequently, actual sell-side pressure in the next bull market may be lower than expected. Given that retail investors find it increasingly difficult to gain an edge in the crypto market, priority should be given to core assets such as Bitcoin.
