Key Takeaways.
- Ongoing market turbulence has caused Solana to lose more than 60% of its market value.
- The preponderance of the SOL tokens that FTX/Alameda has promised are reserved, meaning the firm must earn them.
The problem FTX is having has generated a ripple throughout the cryptocurrency community that has had a significant impact on Solana. Due to recent market volatility, Solana has lost more than 60% of its total market worth. This issue is expected to follow the Ethereum killer for a very long time.
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Price decline for Solana due to FTX/Alameda exposure
Following Solana's announcement made public on Nov. 10, FTX and its sibling company Alameda Research may possess 50 million SOL. The Solana Foundation gave the FTX firms 4 million SOL on August 31, 2020. Through a "linear monthly unlock" method, they also began getting a share of 12 million SOL on September 11, 2020, and roughly 34.52 million SOL on January 7, 2021.
Additionally, on February 17, 2021, the FTX businesses began getting shares of a 7.5 million SOL deposit from Solana Labs. Interestingly, a trade involving the same parties for 62,000 SOL is still pending. The majority of SOL tokens pledged to FTX/Alameda are reserved, indicating the company is obligated to earn them via the regular monthly release procedure even though it does not yet have them in its possession. By January 2028, the final unlocking will have taken place.
This indicates the market what is possibly going to happen to SOL tokens once they are finally released, taking cognizant of FTX's dilemma financially may cause other funds remaining to get frozen or locked. Additionally, the company has $1 billion in assets and $9 billion in debts, which may force its administrators to sell its SOL assets to reimburse creditors.
Solana might modify its token system technically to lessen the effect of FTX to prevent such a situation. Several solutions that may be on the agenda were provided in a fresh management petition that was presented on November 13.
Price alleviation for SOL
Solana has indications of positive divergence between its value and relative strength index(RSI) from an analytical standpoint. When the value of an asset makes deeper lows while the progress signal makes a higher low, a positive divergence occurs. Conventional experts consider it to be a buying opportunity, which might lead to a brief rebound in the price of SOL on its trendline.
Its degree of resistance, based on the range, points to a quick recuperation that is a 20% comeback, therefore there may be a climb in the $18 direction.
On longer-term graphs, though, SOL may continue to fall into $2.50, or perhaps an 80%+ plunge, in 2023 predicated on a massive head-and-shoulders configuration like the one depicted below.
Notably, according to its Volume Profile Visible Range, or VPVR, signal, the token's negative objective lies within the widest range.
