Solana (SOL) was one of the hardest hit blockchains by the FTX collapse. Even now, more than a week after the initial bankruptcy, SOL continues to buckle under the weight of uncertainty left among its users and investors given Sam Bankman-Fried’s (SBF) heavy involvement in the Solana blockchain. Will SOL continue to suffer or is there a reprieve on the horizon for this digital asset?
Solana’s Relationship With FTX
Even now, the reason for Solana’s success is largely tied to its FTX/Alameda relationship. There is no telling if the blockchain would still have found the same level of success otherwise but the investments of these companies played a major role in the accelerated growth and adoption. And now, the blockchain looks to be paying the price for it.
FTX, although now bankrupt, still owns millions worth of SOL after purchasing 50.5 million tokens from the Solana Foundation. It is being released to FTX/Alameda through gradual unlocks that will happen through 2028 but it is this relationship that is hurting Solana right now.
Every single token associated with FTX and Alameda Research has already tanked in the last week, bringing SOL’s price down toward two-year lows. Uncertainties around whether FTX and Alameda would hold the tokens once they’re unlocked or sell immediately also mount sell pressure on the token as each unlock draws closer.
Can SOL Bounce Back From This?
SOL is already down more than 94% on a year-over-year basis and the FTX collapse has not helped matters. The bank run on the exchange saw investors panic sell tokens such as FTT and SOL in large amounts in a bid to avoid any unforeseen losses.
SOL price falls to $13 | Source: SOLUSD on TradingView.com
At $13 per token, SOL is now trading firmly below its 50-day moving average. This is an important technical level for any digital asset in the space if they are to begin another upward rally for the short term. Unless SOL sees a pump that puts it above this level, more decline is likely to follow.
Even with the Solana Foundation assuring users in the space that the blockchain still has about 30 months of runway left with over $100 million in cash, faith in the blockchain still remains low. The Solana Fear & Greed Index shows a score of 25, which puts investor sentiment in the Fear territory.
Add in the fact that the FTX debacle continues to unravel and the crypto winter is about to go into the coldest portion, it remains a likely possibility that SOL could end up in the single-digit levels. If this happens, it would present a unique opportunity to buy the digital asset for a cheap price as continued development on the blockchain makes Solana a good candidate for the next bull rally.
Featured image from Tekedia, chart from TradingView.com
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