Willy Woo: Poor Crypto Market Performance Attributed to FTX Liquidation Mechanism, Rise of Perpetual Futures Basis Trade Strategy Continues to Exert Selling Pressure

March 26 – Crypto analyst Willy Woo says current market sentiment is weak, with altcoins underperforming broadly. The key driver traces to the asset liquidation mechanism of **collateral token discounted trading with futures hedging overlay** launched post-FTX bankruptcy. During FTX’s liquidation, massive amounts of locked SOL were sold via **payment-before-delivery agreements**—often at over 60% discounts due to limited liquidity. Hedge funds bought these tokens, hedged price risk via futures markets, and layered in staking rewards plus basis gains to lock in nearly 70–80% **near-risk-free returns**. The strategy has since spread industry-wide: many project teams and their foundations now sell locked tokens early to hedge funds, which hedge via derivatives markets to absorb selling pressure. This has made it hard for retail investors to capture excess returns—a major factor behind this cycle’s poor overall performance. Woo notes a silver lining: the **anticipated future unlock selling pressure** for some projects has been front-loaded. In the next bull market, actual selling pressure could be lower than expected. Given retail investors’ struggle to gain an edge, Woo recommends focusing on core assets like Bitcoin.