The decline of the crypto exchange FTX seems to be unstoppable and in its wake, Solana (SOL) is hit particularly hard. At the weekend, Solana was still trading at well over $30, but is currently trading at around $15. With a minus of 50 percent, SOL stands out from the crypto market, where other important altcoins are also experiencing losses, but not to the same extent as Solana. The reason for Solana’s current special position is that the cryptocurrency, which has been freely traded since April 2020, is a declared pet project of FTX founder Sam Bankman-Fried and he has apparently used SOL on a large scale to hedge trades at his crypto firm Alameda Research as well. Other coins in Solana’s ecosystem such as Serum (SRM) are also in freefall.
So it’s no surprise that Solana co-founder Raj Gokal is calling for a “critical moment” on Twitter and calling for “standing together.” He knows, as does the trade press, that blockchain data is causing worry lines at Solana. As of Thursday morning, the next so-called epoch in Solana’s blockchain will see hundreds of thousands of SOLs pulled from staking, suggesting investors will then want to sell them. It’s not just Gokal that wants to break this trend, as the momentum is otherwise likely to predictably cause further dips in the SOL price curve.
Solana has been criticized for some time not only for recurring network failures but also for an unhealthy concentration of large investors. In this respect, however, Gokal and other executives at Solana at least have a chance to promote trust among “whales” and convince them not to let SOL crash further through large-scale sales. On the other hand, it is not yet transparent how many SOL are still stored at Bankman-Fried, FTX, and Alameda Research and may come to the market in distress sales.
Read more about Solana and find out why it was affected by the crypto exchange FTX crash with our companion app. The Born2Invest mobile app, available for free for both Android and iOS versions, keeps its readers up to date with the latest financial news of the day.
Conclusion: In for a penny, in for a pound – Solana in an existential crisis
Solana has already lost its place among the ten most capitalized cryptocurrencies in the world, which it thought was safe, as a result of the price plunges. If another wave of SOL selling occurs, the crash could go even further with negative side effects for the entire ecosystem. DeFiLlama measures about 30 percent capital outflow in Solana’s DeFi division within the past 24 hours. At least there is hope from Solana’s leadership team, which has not gone into hiding but is actively soliciting support. As an investor, you not only need good nerves with SOL at the moment, but you should also keep an eye on the overall situation in the crypto markets, where there are no signs of relief at the moment.
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First published in BLOCK_BUILDERS.DE a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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